Senate Hearing, 113TH Congress - Connecting Urban and Rural America: The State of Communications On The Ground

S. HRG.
113188
CONNECTING URBAN AND RURAL AMERICA: THE

STATE OF COMMUNICATIONS ON THE GROUND
FIELD HEARING
BEFORE THE
SUBCOMMITTEE ON COMMUNICATIONS,
TECHNOLOGY, AND THE INTERNET
OF THE
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
AUGUST 19, 2013
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
JOHN D. ROCKEFELLER IV, West Virginia, Chairman
BARBARA BOXER, California
JOHN THUNE, South Dakota, Ranking
BILL NELSON, Florida
ROGER F. WICKER, Mississippi
MARIA CANTWELL, Washington
ROY BLUNT, Missouri
MARK PRYOR, Arkansas
MARCO RUBIO, Florida
CLAIRE MCCASKILL, Missouri
KELLY AYOTTE, New Hampshire
AMY KLOBUCHAR, Minnesota
DEAN HELLER, Nevada
MARK WARNER, Virginia
DAN COATS, Indiana
MARK BEGICH, Alaska
TIM SCOTT, South Carolina
RICHARD BLUMENTHAL, Connecticut
TED CRUZ, Texas
BRIAN SCHATZ, Hawaii
DEB FISCHER, Nebraska
MARTIN HEINRICH, New Mexico
RON JOHNSON, Wisconsin
EDWARD MARKEY, Massachusetts
JEFF CHIESA, New Jersey
ELLEN L. DONESKI, Staff Director
JAMES REID, Deputy Staff Director
JOHN WILLIAMS, General Counsel
DAVID SCHWIETERT, Republican Staff Director
NICK ROSSI, Republican Deputy Staff Director
REBECCA SEIDEL, Republican General Counsel and Chief Investigator
SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY,

AND THE INTERNET
MARK PRYOR, Arkansas, Chairman
BARBARA BOXER, California
BILL NELSON, Florida
MARIA CANTWELL, Washington
CLAIRE MCCASKILL, Missouri
AMY KLOBUCHAR, Minnesota
MARK WARNER, Virginia
MARK BEGICH, Alaska
RICHARD BLUMENTHAL, Connecticut
BRIAN SCHATZ, Hawaii
EDWARD MARKEY, Massachusetts
ROGER F. WICKER, Mississippi, Ranking

Member
ROY BLUNT, Missouri
MARCO RUBIO, Florida
KELLY AYOTTE, New Hampshire,
DEAN HELLER, Nevada
DAN COATS, Indiana
TIM SCOTT, South Carolina
TED CRUZ, Texas
DEB FISCHER, Nebraska
RON JOHNSON, Wisconsin
JEFF CHIESA, New Jersey
(II)
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CONTENTS
Page
Hearing held on August 19, 2013 ...........................................................................

Statement of Senator Pryor ....................................................................................
1
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WITNESSES
Hon. Jessica Rosenworcel, Commissioner, Federal Communications Commission ........................................................................................................................
Prepared statement ..........................................................................................
Sam Walls III, President, Connect Arkansas ........................................................
Michael Manley, RNP, MNSc, AR SAVES Director, Director of Outreach,
UAMS Center for Distance Health, University of Arkansas for Medical
Sciences .................................................................................................................
David L. Merrifield, Executive Director, Arkansas Research and Education
Optical Network ...................................................................................................
Susan Harriman, Director of Policy and Special Projects, Arkansas Department of Education and Coordinator of STEM Works, State of Arkansas
on behalf of the Fast Access for Students Teachers and Economic Results
(FASTER) Arkansas committee ..........................................................................
Lang Zimmerman, Commissioner, Arkansas Economic Development Commission and Vice President, Yelcot Communications .............................................
Jeffery Hall, Associate Director of Government Affairs, Arkansas Farm Bureau .......................................................................................................................
Jeff R. Gardner, President and Chief Executive Officer, Windstream Corporation ........................................................................................................................
Edward Drilling, President, AT&T Arkansas .......................................................
John Strode, Vice President of External Affairs, Ritter Communications Holdings, Inc. on behalf of Ritter Communications Holdings, Inc., NTCAThe
Rural Broadband Association, and the American Cable Association ..............
Dean Kurtz, Vice President, Regulatory and Legislative Affairs, Southern
Region, CenturyLink ............................................................................................
Greg Ashcraft, Chief Financial Officer, South Arkansas Telephone Company ..
David Russell, Vice President of External Affairs, Verizons South Area ..........
L. Elizabeth Bowles, President and Chairman of the Board, Aristotle, Inc. ......
Steven G. Sanders, Jr., President and General Manager, Northern Arkansas
Telephone Company (NATCO) ............................................................................
Allen Weatherly, Executive Director, Arkansas Educational Television Network .......................................................................................................................
Len Pitcock, Director of Government Affairs, Cox Communications ...................
(III)
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Mike Wilson, Senior Director of Government Affairs, Comcast of Arkansas .....

Doug Krile, Executive Director, Arkansas Broadcasters Association .................
LaDawn Fuhr, MidSouth Regional Manager of Community and Government
Relations, Suddenlink ..........................................................................................
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CONNECTING URBAN AND RURAL AMERICA:

THE STATE OF COMMUNICATIONS ON THE
GROUND
MONDAY, AUGUST 19, 2013
U.S. SENATE,
COMMUNICATIONS, TECHNOLOGY, AND
THE INTERNET,
COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION,
Little Rock, AR.
The Subcommittee met, pursuant to notice, at 9 a.m. in the
Board Room, Electric Cooperatives of Arkansas, Little Rock, Arkansas, Hon. Mark Pryor, presiding.
SUBCOMMITTEE
ON
OPENING STATEMENT OF HON. MARK PRYOR,

U.S. SENATOR FROM ARKANSAS
Senator PRYOR. I will go ahead and call our meeting to order

here. First, I want to say thank you all for being here.
This is a committee hearing for the Senate Commerce Committee. And there is a subcommittee called Communications, Technology, and the Internet, so this is an official subcommittee meeting. We are following all the protocol that we use in the Senate.
So let me just say thank you for everyone who is here in attendance, especially for our panelists and all the things that you are
going to talk about today.
The title for this hearing is Connecting Urban and Rural America: The State of Communications on the Ground.
And before I say another word, I want to thank the Arkansas
Electric Cooperatives for allowing us to use their facilities today.
Not only are they beautiful but they are very functional. And we
are very appreciative to Katrina Weyland, who I saw earliershe
was the first person I saw when I walked inand also Carmie
Henry, of course, who has been at the co-ops for a long time and
always does great things. But I want to thank the Arkansas Electric Cooperatives, as well as Duane and many others who I have
met here today and just say thank you.
Also, a special welcome to FCC Commissioner Jessica
Rosenworcel, who is here. And she is going to stay here on the
panel, so to speak, and certainly we would love to get her thoughts
and insights as we go.
You know, the nations communications sector is the most dynamic and innovative part of our economy. Whether it is things
like traditional wireline or wireless or broadcasters/cable/satellite,
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or some mixture of those things, lots of investment, lots of innovation, and it has been amazing to watch and amazing to see.
We have a lot of people sitting around this room who really will
play an extremely important part in Arkansass future to make
sure that we get this technology here in our state.
And that kind of goes to really the driving mission, one of the
central challenges that we have on the CTI Subcommittee and
something that I take very personally, and that is: How do we
make sure that these great, cutting-edge, amazing services reach
everyone, not only urban areas but also rural areas and also people
that either maybe dont have the economic ability or maybe have
a disability of some sort or another? How do we make sure that it
reaches everyone?
And I think one of the things we do not want to see is the tale
of two Americas, where you have urban and suburban America
that have the latest and greatest and best technology and they
have the investment and the innovation and all those good things,
and then you get rural America, that is just left behind with second-rate, third-rate telecommunications services. That is not good
for rural America, but really it is not good for anyone.
And as we go through the day, we are going to hear things about
why this is important and why the Congress should continue to
create conditions for things like job creation, innovation, investment, and other aspects that telecommunications brings with it.
So I am proud to be the Chairman of this Subcommittee. Just for
the folks in the room from Arkansas who havent participated in
these in Washington, we have had four what we call state of
hearings. And so the idea was, this year, to start the year with
these four state of hearings. So we had the state of rural communications, the state of video, state of wireless, and the state of
wireline. And we brought a lot of people together to look at the
marketplace, look at the regulatory environment. We were able to
talk about this nationally, get the big-picture view of this.
But todays hearing is really the culmination of those four hearings, in the sense that Arkansas is a great microcosm, that we can
really look at this in more detail, in a more granular way, because
we have in this state all those same challenges. We have the urban
versus the rural. We have, you know, income complexities. We have
things like the diversity of terrainjust, you know, challenges left
and right, to make sure that we do this right.
But the great thing about Arkansas is we have people here on
the ground who are very, very committed to making it run and run
right and run well.
So I would say, if you think about telecommunications and the
impact that it has on all of our lives, it is pretty astounding. I
mean, it is as simple as just calling a friend and talking about
what is going on there, or a loved one, something like that, all the
way to making those 911 and other emergency calls that when you
absolutely need it, you have to have it, because it really does save
lives. And, you know, there are a lot of things in between, about
watching local news, local sports, just being involved with your
community and finding out what is going on there. People are taking classes online. They are conducting more and more business online.
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Now, with all these new technologies, you can have a tablet, you
can watch local TV on your tablet, you can stream movies. I mean,
it is just this never-ending series of applications, this technology,
that really is impacting lives.
And it is not just a luxury; it is something, again, that has become extremely important in our economy. And one thing that we
need to remember is that now economic growth is going to be tied
to this, and economy opportunity. We want to see Arkansas stay
competitive. We want to continue creating jobs. We want to continue to see us improve education, improve health care. And this
is one of the real levelers when it comes to providing cutting-edge,
best-in-class rural health care. But also this comes to safety and
keeping people safe and being able to do things that we have really
never been able to do before.
So, here again, you look at Arkansas. We have this great ecosystem here. We have people that know each other, that want to
work together, want to get it done. We have really large companies
that are doing business here, and we have really small companies.
We have a Fortune 500 company that is based here. We have innovative people. And, as I said before, we have lots of challenges.
So let me just run through our three panels very quickly and tell
you how we are setting up today. The first panel is designed to understand the benefits of broadband and the status of its deployment and adoption across the state. The second and third panels
will be from wireless and wireline providers, broadcasters, and
other media representatives working to bring services to Arkansas.
And then at the end of todays hearing, you know, the goal is
that we would have a more thorough understanding of the national
and state challenges and that we would, that I would, know what
needs to be done to not just improve telecommunications for the
end user but also to create this environment where we continue to
see the innovation and all the things, you know, that this technology promises.
So, again, I want to thank all of you all again. And we are going
to go with our testimony in just a minute, but first I wanted to introduce our FCC Commissioner, Jessica Rosenworcel. She was on
the Senate Commerce Committee staff, and she and I worked on
at least one piece of legislation that was signed into law by the
President, but, actually, we worked on several pieces of legislation.
And she has been very, very good on the FCC, and let me turn the
microphone over to her.
And, by the way, you push this little button, I think the one that
is closest to you on the table.
Go ahead.
STATEMENT OF HON. JESSICA ROSENWORCEL,
COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION
Ms. ROSENWORCEL. Thank you, Senator Pryor. Thank you for

having me here. It is a treat to be here in Arkansas, and I look
forward to hearing from the slate of witnesses we have.
So I have been a Commissioner at the FCC for a little over a
year, but I have actually worked on communications and rural
communications for many years. In fact, before making my way to
the Commission, as the Senator just said, I worked up on Capitol
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Hill as Senior Communications Counsel to the Senate Commerce
Committee.
So in that role I had the opportunity to work with Senator Pryor,
and I know firsthand how he puts the people of Arkansas first. But
more than that, I know he knows how important it is for all Americans, no matter who they are or where they live, to have access to
modern communications.
And if you want proof, you can look at his leadership in the passage of the 21st Century Communications and Video Accessibility
Act. It is a law that extends access to digital-age communications
to all Americans, including those with disabilities. Now, he wont
bragthat is probably not the Arkansas waybut I will. Because
of this law, he is actually responsible for one of the biggest and
most substantial communications laws in decades.
So it is a treat to be here, and I thank him and the Subcommittee. And I am looking forward to hearing directly from people who work hard every day to make sure that all Americans are
connected.
Because on this front we have made real progress. In fact, more
than 80 percent of American households in this country now have
access to broadband at 100 megabits. The United States leads in
the world in fourth-generation LTE wireless deployment. And carriers serving rural America have made real gains in some of our
most remote communities, and this progress has created opportunities for businesses, for jobs, for education, for health care, and for
civic life.
But there is no rest for the weary because laurels are not, in fact,
good resting places. Time is marching on and technology advances,
and every day there is work to do to make sure that rural America
is not left behind.
This is true right here in Arkansas, and the FCC data demonstrate that with clarity. It tells us that over 13 percent of those
in Arkansas lack access to broadband, and in rural areas the number is even higher. Moreover, across the state, broadband adoption
is just about 48 percent. So we have work to do, because it is important that nobody in this state or this country is consigned to the
wrong side of the digital divide.
Now, at the FCC, we have a range of programs and policies that
can help, if we do our jobs right. We have upcoming spectrum auctions that can extend the reach of wireless broadband service to
more rural areas. We have ongoing work on the IP transition,
which is an effort to foster investment in next-generation networks
across the country. We have a Universal Service Fund to help support communications in rural areas. But we need to make sure recent updates to this program help and not hurt rural deployment.
We are updating our E-Rate program that connects schools and
libraries to the Internet. And this is especially exciting because I
think if we change its focus from just connection to capacity, we are
going to make real progress with digital-age education.
Finally, we have also updated our policies to support rural telemedicine through our Healthcare Connect Fund. And I think this
is a good thing not just for health care; it is going to help further
with rural broadband deployment.
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So we have a lot going on, a lot of work to do. But Washington
is awfully long on talk and short on listening, so today I want to
flip that script and I want to listen to you and I want to learn.
So thank you for having me here, and I look forward to your testimony.
[The prepared statement of Ms. Rosenworcel follows:]
PREPARED STATEMENT OF HON. JESSICA ROSENWORCEL, COMMISSIONER,
FEDERAL COMMUNICATIONS COMMISSION
Thank you, Senator Pryor, for your kind introduction. I am honored to speak at
todays hearing on the critical communications issues facing rural America. I also
look forward to hearing the testimony from todays impressive panels of witnesses.
Ive been in this job for a little over a year, but Ive worked on communications
issues facing rural America for many years. I saw them when I worked down in the
trenches as Commission staff and in the private sector. And I saw them when I had
the privilege of serving the Senate Commerce Committee as Senior Communications
Counsel. That is also when I had the tremendous opportunity to work directly with
Senator Pryor. I was able to see first-hand how Senator Pryor fights for the people
of Arkansas. I know he knows how important it is for all Americansno matter who
they are, or where they liveto have access to affordable communications. This
basic truth was born out with Senator Pryors leadership in the passage of the
Twenty-First Century Communications and Video Accessibility Act, which extends
access to digital age communications to all Americans, including those with disabilities.
Today, I salute Senator Pryor for holding this hearing and for allowing us to hear
directly from the people who work so hard to connect all Americans. Weve made
real progress on this front. Today, more than 80 percent of American households
have access to broadband at speeds as high as 100 Megabits. The United States
leads the world in 4G LTE wireless deployment. And our dedicated rural carriers
have already brought communications to some of Americas hardest-to-reach communities. This has created new opportunities for jobs, education, healthcare, and social
and civic engagement. We have made progress. We should be proud.
But laurels are not, in fact, good resting places. Becauseas we have seen
through a series of hearings convened by Senator Pryorcommunications markets
are changing at a breathtaking pace. Time marches on, technology advances, and
there is work to do every day to make sure that our rural communities are not left
behind.
So today, I would like to mention some FCC priorities that hold great promise
for the connectivity for rural Americans and Arkansans: incentive auctions, and updates to our universal service programs, especially the E-Rate program and the
Healthcare Connect Fund.
First up, incentive auctions.
It is no secret that the demands on our airwaves are growing. Look around and
the reasons why are obvious. We are now a nation with more wireless phones than
people. Add to this that one in five households now has a tablet computer. But this
is only the tip of the proverbial iceberg. Because what is emerging is a whole new
world of 50 billion wirelessly interconnected devicesthe coming Internet of Things.
This means we are facing a seismic shift in the demand for our airwaves. To understand how we will manage this challenge going forward, it is useful to briefly
look back.
For nearly two decades, the Commission has led the world with its commercial
spectrum auctions. We have held more than 80 auctions, issued more than 36,000
licenses, and raised more than $50 billion for the United States Treasury. Our efforts are a model for wireless providers and governments around the globe.
Going forward we have a new kind of spectrum auction on the not-too-distant horizon.
Courtesy of Congress and the Middle Class Tax Relief and Job Creation Act, the
Commission now has the ability to conduct spectrum incentive auctions. This is different. We are now permitted to provide incentives to existing spectrum licensees
to voluntarily return some or all of their airwaves in exchange for a portion of the
revenue from the subsequent re-auction of those airwaves for new commercial uses.
This is a smart way to make efficient use of spectrum, which is a limited government resource. And this is instructive. Because across the board in communications
we are going to have to look for new and creative ways to make use of scarce government resources.
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But make no mistake, these auctions are an epic undertaking. They will require
a special brew of economics, law, and engineering. Our rulemaking process is just
underway. It will consume a lot of energy to do this welland do this right.
It also will require a lot of good ideas from anyone and everyone with interest
in spectrum. I know many rural providers are either already providing wireless
services or are considering how to do so. The 600 MHz spectrum that will be available through this auction is well-suited for rural applications. It has great propagation characteristics because it can cover vast distances with limited tower construction.
Second, universal service. More than a year and a half ago, the Commission took
historic steps to update its high-cost universal service fund and intercarrier compensation system. Though it predated my arrival at the Commission, I commend my
colleaguespast and presentfor their effort. They refocused the high-cost universal service system from last centurys technology on the broadband and wireless
challenges of this century. They put it on a budget. And they increased accountability throughout.
But as Ive said before, I worry that our reforms to the high-cost universal service
system are extremely complex. I fear that this complexity can deny carriers dependent on them the certainty they need to confidently invest in their network infrastructure. So when opportunities arise to simplify our rules in a manner that is fiscally sound, good for rural consumers and bound to inspire investmentwe should
seize them.
Recently, we have done just that. We did it when we adopted changes to our regression model to provide rate-of-return carriers with additional flexibility to meet
our new limits. We did it when we adjusted our rules to distribute a second round
of incremental support from first phase of the Connection America Fund for price
cap carriers. We should be willing to make further changes when doing so simplifies
our rules, does not break our budget, and brings better service and more investment
to rural communitiesArkansas included.
Third, the E-Rate program. The E-Rate program may not be as well known as
our high-cost universal service program, but it has done mighty things to connect
both rural and urban schools and libraries across the country. As the Nations largest education technology program, it has connected 95 percent of schools and libraries to the Internet since its inception in 1998. But the job is not done. Because we
are quickly moving from a world where what matters is connectivity to a world
where what matters is capacity. Already, year-in and year-out, the demand for ERate support is double the roughly $2.3 billion the Commission now makes available
annually. Moreover, the agencys own survey indicates that 80 percent of schools
and libraries believe that their broadband connections do not meet their current
needs.
Lets be honest. Those needs are only going to grow. School administrators are
facing tough choices about limited bandwidth in the classroom. How to divvy it up,
what grades and classrooms get it, and what programs they can run on it. This
means that without adequate capacity our students are going to fall short. They will
be unable to realize the full potential of digital learning. Thats a serious problem.
But this is not just a matter of getting schools and libraries connected; its a matter of our global competitiveness. Welcome to the world that is flat. Knowledge, jobs,
and capital are going to migrate to places where workers have digital age skills, especially those in science, technology, engineering and mathor STEM fields. In fact,
the Bureau of Labor Statistics tells us that here at home over the next five years
we will have over 1 million STEM-related job openings. STEM jobs are growing at
a rate three times faster than all other occupations. And even opportunities outside
of STEM will be increasingly digitized, and students in Arkansas and every state
will need technology skills to become competitive in the worldwide workforce.
But we fail our students if we expect digital age learning to take place at near
dial-up speeds. A recent Harris survey found that roughly half of E-Rate schools access the Internet at speeds of 3 Megabits or less. That is too slow for streaming
high-definition video and not fast enough for the most innovative teaching tools.
Add to this that in the United States, out of 42,000 high schools, only 2,100five
percentoffer computer science courses.
Contrast this with efforts underway in some of our world neighbors. They are
pouring resources into these subjects, into schools, and connectivity. For example,
in Singapore 100 percent of schools are wired with high-speed broadband. In South
Korea, 100 percent of schools are also connected to high-speed broadband. With so
much capacity, an effort is underway to transition all students from traditional textbooks to digital readers in 2016. In Uruguay, through a national program, nearly
all primary and secondary schools have been connected and every primary school
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student has access to a free laptop. Uruguay also has revamped its secondary school
science and math curricula adding robotics and national math competitions.
For now, we can recognize that these countries are smaller than the United
States. They have different cultures. They have different education systems. But we
can still take from these examples that improving broadband capacity to schools for
digital age learning must be a national priority. If we fracture this effort and leave
it to every local school jurisdiction we will miss opportunities for scale and savings.
Yet in the end the point is a simple one. Access to adequate broadband is not a luxuryit is a necessity for our next generation to be able to compete. Just like in my
day you wouldnt have a classroom without a blackboard, today we shouldnt have
a classroom without broadband.
We are at a crossroads. We have a choice. We can wait and see where the status
quo takes us and let other nations lead the way. Or we can choose a future where
all American students have the opportunity to gain the skills they need to compete,
no matter who they are, where they live, or where they go to school.
For my part, I believe that it is time to compete. It is time for E-Rate 2.0. We
need to protect what we have already done, build on it, and put this program on
a course to provide higher speeds and greater opportunities in the days ahead.
So I am especially pleased that last month, the FCC began this process with a
rulemaking. There are two issues I believe deserve our immediate focus if we want
to see E-Rate 2.0 up and running fast. We need to focus on setting capacity goals
and simplifying the application process.
First, E-Rate 2.0 must be built on clear capacity goals. By the 2015 school year,
every school should have access to 100 Megabits per 1,000 students. Before the end
of the decade, every school should have access to 1 Gigabit per 1,000 students. Libraries, too, will need access on par with these capacity goals. Capacity goals will
create scale for content and device providers that will help bring the potential of
digital learning to all schools. And the spillover effect for this kind of broadband in
local communities is substantial. Building Gigabit capacity to anchor institutions
like schools and libraries is the ticket to Gigabit cites and the ticket to digital education and economic growth.
To get to these goals, we need to take a hard look at the existing program. We
need to collect better data from each of our applicants about what capacity they
have and what capacity they need. Then I think we can make adjustments to how
we prioritize funding to ensure that schools shorter on capacity get greater access
to support.
As part of this hard look, we should phase down the estimated $600 million we
currently spend on outdated services like paging and free up those funds for more
high-capacity broadband. But growing this program is about growing national infrastructure and enhancing educational opportunity for the next generation. It is a conversation we need to have, because it is where we need to invest now.
Second, we need ideas from stakeholders far and wide about how to simplify the
application process. I can tell you from my experiences speaking about E-Rate during the last several months that nothing gets applause like the promise of simplifying the process. I hope we can take a fresh look at how the complexity of our existing system can deter small and rural schools from applying. To this end, in our rulemaking we ask about the feasibility of multi-year applications. This could substantially reduce paperwork and administrative expense. We also ask how to encourage
greater use of consortia applications. This could mean greater scale and more costeffective purchasing. I think these are good ideas. We should be open to others
especially from those who know the challenge of filling out these forms year-in and
year-out.
So lets seize the powerful combination of broadband, plummeting device costs,
and increasing opportunity for cloud-based educational content. Lets work together
to reboot, reinvigorate, and recharge the E-Rate program for the 21st Century.
Lastly, we are working to connect rural healthcare institutions through the
Healthcare Connect Fund. Telemedicine is no longer a dream for the distant future.
It is here and now, and it can be an integral part of modern medicine. More than
5 million Americans had their medical images read remotely last year and 1 million
Americans currently benefit from remote cardiac monitoring for implantable devices.
In hospitals, a full 10 percent of all intensive care unit beds now use telemedicine
in some form. Add to these numbers the tens of thousands of mobile health applications available on smartphonesand you quickly get the picture. Technology is
changing the nature of medicine and the way it is practiced in communities in
urban areas, rural areas, and everything in between.
All of this is impressive. But the best is yet to come. Imagine how telemedicine
can help keep local bonds strong in rural communities by fostering aging in place.
Imagine how it can reduce the costs and risks of patient transport. Imagine how
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it can link rural patients to specialists in urban areas. The Commission has already
contributed to the success of telemedicine by across the board increasing access to
wireless and broadband networks that support a range of new health IT applications. And this year, for the first time, we make funding available under our new
$400 million Healthcare Connect Fund. Under the program, eligible health care providers can apply to receive funding to cover 65 percent of the cost of either
broadband services or healthcare provider-owned networks.
We hope that with our updated Healthcare Connect Fund, we can continue to
work with our Federal partners in other agencies to make sure that our efforts are
always in concert. And we hope that we can work with our state partners to ensure
that state medical licensing policies can foster, rather than hinder, the potential for
telemedicine to improve medical care in the digital age.
Thank you to Senator Pryor for organizing this hearing. I look forward to hearing
from the witnesses about connecting rural and urban communities in Arkansas.
Senator PRYOR. Thank you, Commissioner Rosenworcel. It is

great to have you here. And I hope when you are in Arkansas it
is not all work, work, work. I hope you have some fun while you
are here too.
Let me go ahead and introduce this first panel. There is really
no particular order on this, but I am just going to introduce everybody, you know, all at once, and then we will just go around and
let everybody have their time for testimony.
I think we are asking everyone to limit their opening statement
to 3 minutes, if possible, and then have plenty of time for discussion as we go.
So let me just say, first, we have Jeffery Hall. He is with the Arkansas Farm Bureau. Sam Walls III is President of Connect Arkansas. Michael Manley is Director of Outreach, University of Arkansas for Medical Sciences; he is at UAMS. Lang Zimmerman, he
is really wearing two hats today: Vice President of Yelcot Communications, but he is also Commissioner of the Arkansas Economic
Development Commission, which is great. And I just saw him last
week. David Merrifield, he is with Arkansas Research and Education Optical Network. And Susan Harriman, she is a member of
Fast Access for Students, Teachers, and Economic Results, which
they call FASTER.
So let me just do this. Mr. Walls, if you dont mind, why dont
we start with you and just go around the table this way. How does
that sound for simplicity? Thank you.
STATEMENT OF SAM WALLS III, PRESIDENT,
CONNECT ARKANSAS
Mr. WALLS. I am just curious how someone with the last name
of Walls starts first alphabetically.
[Laughter.]
Mr. WALLS. But thank you, Senator, for the opportunity to
present today.
My name is Sam Walls, and I am Senior Vice President with Arkansas Capital Corporation and President of Connect Arkansas,
which is a 501(c)(3) private nonprofit with a mission to prepare the
people and businesses of Arkansas to secure the economic, educational, health, social, and other benefits available via broadband
use.
We have been primarily funded through two grants from the
2009 Recovery Act, NTIA Broadband Technology Opportunities
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Program, as well as some state matching funds and some contributions from service providers.
We are not a service provider, so our focus has been solely based
on the idea of driving peoplewhy are people not adopting the
Internet, and how can we help overcome those obstacles? Through
our surveys and outreach, we kind of broadly put those in two
boxes. We are talking about accessibility and lack of broadband
education.
From the accessibility side, the first question obviously is, do Arkansans have access to Internet? And working with service providers over the last several years, we have produced a pretty accurate coverage map that tells us, if you take out satellite Internet,
98 percent of Arkansans have access to broadband Internet. Take
out wireless broadband, that drops to 92 percent. So, on the face,
those statistics would show, at least from the ability to get on, that
a majority of Arkansans have it.
To be fair, the definition of broadband in that one is 768-kilobits-per-second download. So there is an argument to be made
whether that issome people certainly would say that is not sufficient for a lot of todays applications. But that is the definition we
have used. From our surveys, we do know that in some areas of
the state speed and reliability are still an issue.
We then ask, okay, if they have access, what are other barriers
to keep them offline? And, clearly, the two big ones are cost of service and cost of equipment to get online. And cost of service is,
again, going to be driven in large part by what type of technology
you are trying to utilize, where you are located, and how much
competition is in that particular footprint. And then buying the
equipment is as simple as, obviously, some families income levels
are such that they cant make that initial investment to get online.
Going to the next one, it isall right, so you have the access
issue. What is the other piece that is keeping people offline? And
that is where we get a lack of broadband education. And we kind
of break that into two categories. It is those that question the relevancy of it still in their life, and then are those that they know
it is relevant but they are intimidated by the process. Certainly, a
lot of our older Arkansans may fall into that box.
Through our grants, Connect has tried to identify these things
and has come up with various ways to try to help people overcome
these, to explain the relevancy, to teach them and work with other
groups to get them comfortable with the Internet.
In my last few seconds here, you know, a lot of the conversation
is and will continue to be on the delivery platform sidehow much
money we spend to expand access, to expand speeds. And, certainly, that is the larger question.
We, however, have seen the value of the grassroots-type initiatives that we do on that end. And we would ask that, you know,
as you continue going forward and look to put resources to it, it is
a phenomenal ROI to continue to put forth this grassroots effort to
support those type of things that Connect and other groups have
donewe are certainly not the only one in this boxand not only
build it from the outside but help us push the adoption from the
inside.
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And the analogy that has been used often is that it is the same
efforts that were years ago in the rural electrification and getting
people to adopt just basic electricity in their homes. It is the same
thing here. And this thing will grow faster and get the benefits
quicker if we attack this on both ends.
I do appreciate your time today. Thank you.
[The prepared statement of Mr. Walls follows:]
PREPARED STATEMENT
OF
SAM WALLS III, PRESIDENT, CONNECT ARKANSAS
Good morning. My name is Sam Walls and I am a Senior Vice President with Arkansas Capital Corporation and President of Connect Arkansas, a private nonprofit
dedicated to increasing high-speed Internet adoption in Arkansas. Connect Arkansas was created in 2007 in response to the Connect Arkansas Broadband Act passed
by the Arkansas legislature that same year. The Act states that Connect Arkansass
mission is to prepare the people and businesses of Arkansas to secure the economic,
educational, health, social, and other benefits available via broadband use.
To date, Connects primary source of funding has been from two Federal grants
from the 2009 American Recovery and Reinvestment Act through the United States
Department of Commerces National Telecommunications Information Agencys
Broadband Technology Opportunities Program. This funding is projected to end by
September 2014. The State of Arkansas has also provided matching funds for these
grants as well as many service provider.
Connect has conducted numerous surveys of Arkansas citizens and the results
show that barriers to Internet adoption can be stated broadly as: Access and Education. Connect has attempted to address issues within the parameters of its Federal and state grants.
When looking at Access, Connect first asked whether Arkansans have the ability
to connect to the Internet if they so desired. Connect developed, in partnership with
over 75 broadband providers, a detailed broadband access map of Arkansas. This
map is updated biannually and is available online. Today, not counting satellite
Internet access, but including mobile wireless Internet, 98 percent of the Arkansas
population has access to broadband Internet. Without mobile wireless, 92 percent
have access. Those percentages on their face would indicate that availability is not
an issue for most Arkansans. It is important to note, however, that for purposes of
these statistics, broadband Internet is defined as 768 kilobits per second download
speed. There are those that would argue that these speeds are not adequate for
many of todays applications. From our surveys and feedback from consumers, we
do know that the quality of the available broadband Internet access is a concern
for some with lack of speed and reliability are the most common complaints.
Continuing to explore the issue of broadband Access, Connect has asked the question: Why are Arkansans that do have Internet availability in their area not subscribing? As one would expect there are a number of reasons. In no particular order:
Cost of service is a common response to this question. Pricing for Internet service varies widely depending on what technology is being used, where a person
is located and lack of competition. While for some people, this issue is more that
they do not view the Internet as a necessity. For many others, however, it does
come down to a lack of resources to pay for it. Connect Arkansas has worked
with various services providers to develop a discount broadband program for
low-income families and we are seeing more services providers offer similar programs on their own.
Cost of equipment to access the Internet is another issue for some. Many families state that they cannot afford the initial expense of purchasing the equipment necessary to get online. Connect has attempted to address this issue
through its Computers for Kids program and its Discount Computer Program.
Since 2011, Connect has distributed over 1,300 free, refurbished, Internet ready
computers and provided training to families utilizing the free or reduced lunch
program. In a recent survey, over 60 percent of those families are now Internet
subscribers.
Lack of Access though is not the only issue that has kept Arkansans from adopting the Internet. Connect has looked deeper into the problem and asked that for
those Arkansans that DO have Internet availability AND can afford the equipment
and the cost of service why are they still not subscribing? Broadly speaking it is
a lack of broadband education. Connect breaks this issue down into two categories.
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The first category is people who do not believe they need the Internet. Connect
surveys in 2012 show that 36 percent of non-adopters view the Internet as not relevant to their daily life. Responders stated that they were, not interested, it was
a waste of time or that they did not need or want it. This is an improvement
from 2011 surveys that showed 47 percent with this sentiment.
To reach out to people in this segment, Connect has applied a strategy where it
promotes relevancy to peoples lives through various initiatives such as:
Connect has promoted telemedicine a number of ways. One of the largest efforts
was through a partnership with the University of Arkansas for Medical Sciences
to train nearly 3,300 medical professionals and 300 community anchor institutions on the use of new and life-saving tele-health equipment.
Connect has partnered with the Information Network of Arkansas to build and
maintain nine transactional county websites in Arkansas which has allowed
citizens of those counties access to services and information that they in the
past did not have access to. By the Spring of 2014 that number will be 17 counties.
Connect has developed resources for small business owners, giving them access
to information that will help them start, manage or expand their businesses.
The website, called Arkansas SourceLink, launched with more than 100 Arkansas nonprofit service providers. It also includes a calendar noting upcoming
training and events in the state.
Starting in 2012, Connect began its Get Connected campaign using nearly 170
media outlets to promote broadband awareness, including TV, radio and newspaper advertising, as well as active ongoing public relations outreach to the
media. This campaign had generated over 2,000 phone calls from people interested in learning more.
Connect has worked in 17 counties as part of its E-Communities initiative to
help leaders at the county and local levels to identify where Internet is relevant
to their strategic goals in the areas of agriculture, education, economic development, government, health, libraries and tourism.
Connect has met extensively with numerous state and local educational agencies to further the use and availability of the Internet throughout the educational system.
Connect has set up informational booths at multiple community events to promote broadband usage and relevancy.
The second category is people who do not know how to utilize the Internet. Current students within the Arkansas educational system are receiving more and more
instruction using the Internet. However, many Arkansas adults not currently receiving an education find the Internet too intimidating and foreign. This is particularly
true to older Arkansans. Surveys show that this lack of education on how to use
the Internet is also a significant barrier to many.
Connect independently, and at times in partnership with other organizations, has
conducted Adult Digital Literacy training on topics ranging from Internet security
and safety to communicating with family and friends using high-speed Internet.
Since January, more than 500 adultsmostly senior citizenshave taken advantage of this opportunity. Connect has partnered with the Arkansas Small Business
and Technology Development Centers to offer their Website in a Day and Social
Media/Getlisted.org Training in 57 counties. These are free opportunities for small
business owners, tourism and history officials, and economic developers to see the
ease of building and launching a website and embracing social media and promotion
of virtually all search engines. Nearly 300 business owners and governmental workers have received training. Connect has taught e-entrepreneurship classes to 2,140
7th12th grade students using I-pads emphasizing e-commerce and website development and has hosted an online high school business plan competition with over 220
students and teachers having participated.
There is no question that broadband can have a transformative impact on Arkansas. State leaders are constantly striving to positively affect the lives of our citizens
through improving education, raising the per capita income, expanding and enhancing access to quality healthcare among other efforts. Widespread access and adoption of broadband Internet by Arkansans arguably will be a fundamental necessity
when trying to develop strategies for these efforts. Currently, 71 percent of Arkansans have Internet in their home which actually compares favorably to the national
average of 62 percent according to the Pew Foundation. Service providers will continue to expand and improve coverage within the state and entities like Connect Arkansas will strive to grow Internet adoption and usage by our citizens.
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Connect would like to inform this hearing that on Thursday, September 26, there
will be a one day conference held in Little Rock called the Connecting Arkansas
Internet Conference in which state leaders will meet to discuss current broadband
issues facing our state. We certainly invite anyone here today to attend, there is
more information and registration on our website, connect-arkansas.org.
On behalf of Connect Arkansas, I would like to thank you for the opportunity to
present today and applaud your continued efforts on this subject.
Senator PRYOR. You bet. Thank you.

Mr. Manley?
STATEMENT OF MICHAEL MANLEY, RNP, MNSC, AR SAVES
DIRECTOR, DIRECTOR OF OUTREACH, UAMS CENTER FOR
DISTANCE HEALTH, UNIVERSITY OF ARKANSAS FOR
MEDICAL SCIENCES
Mr. MANLEY. Thank you, Senator Pryor, for the opportunity to

come today. It was almost 6 years ago to the day that we were before you, before an FCC Commission meeting, talking about the future of health care and where technology could take it. My boss,
Dr. Curtis Lowery, and Tina Benton presented that day 6 years
ago.
I can tell you we have good news. Margaret Mead wrote, Never
doubt that a small group of thoughtful, committed citizens can
change the world. Indeed, it is the only thing that ever has. We
were a small group of 10 individuals sitting around a table dreaming of how we could help health care here in the state of Arkansas
better serve not only our urban areas but our rural areas as well.
I can proudly say on August 1, 2010, the UAMS Center for Distance Health was awarded $102 million for the deployment of a
healthcare educational video-imaging and data network, now
known as Arkansas e-Link.
It was a daunting task, sitting around as a small group, knowing
that other individuals like AT&T, Windstream, Suddenlink, and
our partners that are sitting here today were probably doing the
same thing. But we knew something had to change here in the
state of Arkansas with health care.
We can say today that every county in the state is now part of
this e-Link network. Every hospital in the state is now a part of
this. Every 4-year, which Mr. Merrifield will talk about, institution
and 2-year colleges, human development centers, federally-qualified
community health centers, mental health clinics, home health
agenciesall came together here in the state of Arkansas to be
able to accomplish this major task of being able to be connected.
Now, this was built on other things that already existed, such as
our ANGELS Program, which took care of high-risk OB patients by
using video technology so the moms could stay closer to their local
provider to get their ultrasounds, to have access to four maternalfetal medicine sub-specialists across the state. Currently, we have
23 clinics that are going, and we do over 3,000 consults a year. So
these high-risk moms are getting their care closer to home.
Built upon that, also, because it was workingArkansas also,
healthcare-wise, was ranked 53rd in 2009 in stroke mortality
53rd. That means even Puerto Rico beat us. That is not good. So
now, through this network, we are covering 41 hospitals across the
state and their emergency department, again, with four vascular
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neurologists that are being able to give t-PA clot-busting drug to
patients who need it.
Does this make a difference? Absolutely. Where we used to deliver t-PA less than 1 percent of the time, we are now delivering
this drug to over 30 percent of our patients that we are getting
consults on. And this means better outcomes and not going to nursing homes or funeral homes but actually going home.
And this doesnt matter if you live in Osceola, DeWitt, and Helena, because we also service hospitals in El Dorado, Hot Springs,
and Fayetteville.
I can report to you, Senator Pryor, that as of September 30,
2013, the Arkansas e-Link project will be fully deployed and all
money spent according to the terms of the grant by the NTIA.
In closing, Arkansas is now one of the top connected telehealth
educational states in the country. We are not below; we are in one
of the top five. We are not ranked 49th or 50th in what we are
doing with health care and education.
This project builds upon relationships that we appreciate, technology, and of course the support within the healthcare community,
with one unifying theme that we continue to be held by all as we
continue farther: Where you live shouldnt determine whether you
live or whether you die. And we wake up every morning knowing
we have much more work to do.
Thank you.
[The prepared statement of Mr. Manley follows:]
PREPARED STATEMENT OF MICHAEL MANLEY, RNP, MNSC, AR SAVES DIRECTOR,
DIRECTOR OF OUTREACH, UAMS CENTER FOR DISTANCE HEALTH, UNIVERSITY OF
ARKANSAS FOR MEDICAL SCIENCES
Margaret Mead wrote, Never doubt that a small group of thoughtful, committed
citizens can change the world, indeed, its the only thing that ever has.
A small group of 10 set around a table in 2009 and thought of how we could
change the face of health care here in Arkansas by utilizing proven cutting edge
technology and patient centered outcome care, while spreading it across the entire
state. UAMS Center for Distance Health (CDH) applied with thousands of others
for a Broadband Technology Opportunity Program grant being administered by the
Federal Department of Commerce. Partnering with over 400 Community Anchor Institutions (CAI) state wide, the Department of Commerce saw we had something
special that would be more than just expanding broadband. On August 1, 2010, the
UAMS Center for Distance Health was awarded $102 million for the deployment of
a Healthcare/Educational video/imaging/and data network later known as Arkansas
e-Link.
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The funded service areas encompass:

Every county in the state (75)
Every economically distressed county in the state (69)
Every county in Arkansas within the Mississippi Delta, the most distressed
area of the country (42)
Every medically underserved county in the state (73)
135 communities
The project partners with community anchor institutions including:
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Every acute care hospital, county health clinic, and center on aging
Every four-year state university and all but one state two-year college
All state human development centers
A majority of federally qualified community health centers
A majority of mental health clinics and home health agencies
The states only academic medical center
The states only publicly owned fiber optic network (AREON)
The states only bioterrorism network
The states only trauma network
Eight public libraries
An ambulance service
Other clinics, centers, and educational units
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15
The upgraded Arkansas Telehealth Network integrated with AREON in a huband-spoke system that ensures dedicated healthcare, higher education, public safety, and research activities, freeing existing circuits for public Internet use. Hubs and
spokes have received bandwidth upgrades, interactive video equipment, and/or public computers based on their needs.
Primary Hubs represent 48 sites serving large numbers of end-users that will
connect to a statewide fiber network for upgrades of 100 Mbps+, enabling simultaneous management of up to 40 broadband transmissions, including distance
education or clinical video conferencing, imaging transfers, record transfers, remote monitoring, and health information exchange.
Secondary Spokes represent 74 regional sites upgraded to 10 Mbps at 59 sites
and 20 Mbps at 15 sites via dedicated point-to-point connections are providing
up to 15 distance education or clinical video conferences, imaging transfers,
record transfers, and remote monitoring.
Tertiary Spokes represent 352 sites serving primarily rural areas that will receive upgrades or new lines of 1.5 Mbps at 154 locations, which enables one simultaneous distance education or clinical video conference, image transfer, and
record transfer. All tertiary spokes will receive equipment upgrades.
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This solution did not compete with Internet Service Providers but rather contract
with ISPs to provide network services.
Built on the backbone of existing prior telehealth programs infrastructure, ANGELS (Antenatal Neonatal Guidelines Education Learning System) and AR SAVES
(Stroke Assistance through Virtual Emergency Support), the potential in the very
near future of adding many healthcare specialties on this middle mile highway was
possible through this project. ANGELS (Antenatal Neonatal Guidelines Education
Learning System) was set up to take care of high risk pregnancy patients across
Arkansas. The limited Maternal Fetal Medicine specialists in 2003, which were all
centrally located in Little Rock, instigated the need to better serve these patients
in a new way. Driven by having better patient outcomes by using this technology
to take our specialists out to the patients rather than always having the patients
come to them in Little Rock was the answer. ANGELS currently has 23 active telemedicine clinics across the state, and are currently serving over 3,000 consults per
year via the network. Our most fragile patients now have access to the care they
deserve to ensure both moms and babies have the best outcomes possible.
16
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Taking that existing knowledge and broadband network that has been created, a
proposal was again made to seek how we could better care for our acute stroke patients here in Arkansas. In 2009 when AR SAVES was started, the state was
ranked 50th in stroke mortality, and overall, we were only administering the clot
dissolving drug t-PA used in ischemic stroke cases to less than 1 percent of all eligible patients. Again, just for the fact there werent enough vascular neurologists as
resources in our community hospitals. After 4 years of building our program, AR
SAVES currently serves 41 hospital Emergency Departments with only 4 vascular
neurologists from around the state. On average, we are administering t-PA 30 percent of the time to all consults, with this number improving monthly. Time is of
the essence with these patients, so not all make it under the time limitations. The
AR SAVES program is not only making a difference in small rural hospitals such
as Osceola, Dewitt, and Helena, but also in more urban areas such as El Dorado,
Hot Springs and Fayetteville.
17
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I can report that as of September 30, 2013, the Arkansas E-Link project will be
fully deployed and all money spent according to the terms of the grant. The AR eLink Program has been highlighted as a success by the NTIA at several meetings
and events. But it doesnt stop here. We will continue to work to put more health
and educational applications on this highway as we continue forward. This middle
mile infrastructure has made a great investment into the broadband infrastructure
to benefit the local communities in many ways. The next level of the individual patient for healthcare, or student in education, is coming fast and furious. Youve
heard Theres an app for that? We are here to say that there is such a thing.
Thousands of mobile healthcare and educational apps are being developed and deployed as we speak. The eventual migration onto this system will assist even more
with better outcomes for the citizens of Arkansas.
In closing, Arkansas is now one of the top connected Telehealth/Education states
in the country. This network provides the very foundation required to build a comprehensive plan to tackle the states laundry list of health adversities. A centrallymanaged, comprehensively-collaborative telehealth network will allow opportunities
to build any number of programs. Our citizens will benefit tremendously from the
Arkansas e-Link project, meeting needs of healthcare access to limited resources in
both rural and urban areas. This project builds upon relationships, technology, and
support within the healthcare community, with one unifying theme held by all,
where you live, shouldnt determine whether you live or whether you die.
Who may I contact for further information?
Curtis Lowery, MD
University of Arkansas for Medical Sciences
4301 West Markham Street, #518
Little Rock, Arkansas 72205
(501) 6865847
E-mail: LoweryCurtisL@uams.edu
18
Michael Manley, RNP, MNSc
(501) 5267453
E-mail: ManleyMichaelO@uams.edu
Tina Benton, RN
(501) 6865986
E-mail: BentonTinaL@uams.edu
Senator PRYOR. Thank you.

Mr. Merrifield?
STATEMENT OF DAVID L. MERRIFIELD, EXECUTIVE
DIRECTOR, ARKANSAS RESEARCH AND EDUCATION
OPTICAL NETWORK
Mr. MERRIFIELD. Senator Pryor and distinguished members of

this panel, thank you for the opportunity to participate in todays
hearing.
My name is David Merrifield, and I am the Executive Director
of the Arkansas Research and Education Optical Network, or ARE
ON. AREON is a not-for-profit consortium created to apply advanced communications technologies to support and elevate education, research, and economic development in Arkansas. We were
first established in 2008, and our members include all of the states
public 4-year universities and nearly two dozen 2-year community
colleges.
AREON operates a high-speed optical network that connects all
of our university and college members. Our network utilizes over
2,200 miles of dark fiber, much of which is provided by commercial
providers throughout the state through long-term capital leases.
An important distinction about AREON is that we own and operate the equipment that lights the fiber, rather than purchasing
that service through typical and traditional communications services. This gives us enormous flexibility to uniquely tailor our network to the often-demanding needs of the community of higher
education institutions that we represent.
AREON delivers extremely high-speed broadband access to its
members, with speeds up to 10 gigabits per second. And discussions today are under way for 100 gigabits per second. Our members receive general commodity Internet access as well as connections to national research and education networks such as
Internet2 and the National LambdaRail.
AREON enables the development and use of applications that
leverage the high-speed network to do research and education in
new and innovative ways. Broadband access without limitations
permits our users to find new approaches to educational and research challenges and to collaborate with their peers and colleagues nationally and internationally.
As a sub-recipient of the $102 million NTIA BTOP grant received
by the University of Arkansas system in 2010, AREON expanded
its fiber-optic network to connect the 2-year community colleges
throughout the state and to provide infrastructure over which, as
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Mr. Manley has stated, the University of Arkansas for Medical
Sciences has connected over 450 healthcare institutions statewide
to form the Arkansas e-Link network.
AREON would not be possible today without access to dark
fiber from its commercial providers. It is our opinion that public
policy and funding for national and state broadband initiatives
should leverage public-private partnerships. Our investments have
substantially benefited our providers by enabling them to construct
more fiber, to reach more customers, to access more affordable telecommunications and Internet services, and to provide better rates
and service to their customers.
It has been my honor to provide testimony, and I would be glad
to answer any questions as arise. Thank you.
[The prepared statement of Mr. Merrifield follows:]
PREPARED STATEMENT OF DAVID L. MERRIFIELD, EXECUTIVE DIRECTOR,
ARKANSAS RESEARCH AND EDUCATION OPTICAL NETWORK
Subcommittee Chairman Mark Pryor, and distinguished members of this panel,
thank you for the opportunity to participate in todays field hearing on the state of
communications in Arkansas and the impact broadband can have on improving consumer access to telemedicine, education, and business development.
My name is David Merrifield, and I am the Executive Director of the Arkansas
Research and Education Optical Network, or AREON. I am a 36-year employee of
the University of Arkansas, having served in Information Technology roles throughout my career, including the development and deployment of the Internet in higher
education in Arkansas from the very beginning. I also hold an appointment by Governor Mike Beebe on the Arkansas State Technology Council.
AREON is a not-for-profit consortium created to develop and apply advanced
communications technologies to support, enhance, and elevate education, research,
public service, and economic development throughout the State of Arkansas. We
were established in 2008 by an agreement among the public, four-year universities
in Arkansas. Our members include all of the four-year universities as well as the
nearly two dozen two-year community colleges that make up the Arkansas Association of Two-Year Colleges.
AREON operates a high-speed network that connects all of our four-year university members, and soon, most of the two-year colleges within the state. Our network
is an optical network. That is, the network utilizes dark fiber optic cable throughout, which is then lit with our own equipment to create the communications links
that tie our universities and colleges together. I want to draw your attention to an
important distinction about the AREON network. We own and operate the equipment that provides the light that passes from city to city, university campus to university campus, over fiber optic cable rather than purchasing traditional communications services from providers. This gives us enormous flexibility to uniquely tailor our network to the often demanding needs of our community of higher education
institutions.
AREON has from its inception focused on delivery of extremely high-speed
broadband networking to its higher education member institutions. Besides providing access to the general commodity Internet, our robust state network connects
our members to each other, to national research and education networks such as
Internet2 and National LambdaRail, and to our peer state networks in neighboring
states, including Oklahoma, Texas, Louisiana, and Tennessee. AREON is one of
nearly forty state-based networks throughout the United States, most of which utilize their own optical networking infrastructure to serve their respective constituents of educational and public institutions.
AREON has also worked to create a leadership role in enabling the development
and use of applications that leverage the high-speed network to do research and
education in new and innovative ways. Broadband access without limitations permits our users to find new approaches to educational and research challenges. We
encourage our universities and colleges to collaborate with their peers and colleagues statewide, nationwide, and internationally through the network. Such collaboration is often not possible without the ability to exchange large amounts of
data or to effectively share resources such as scientific instrumentation or high performance computing clusters across the network.
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Researchers, faculty, and students continue to stretch the bounds of the available
networking infrastructure. Researchers utilize high performance large-scale computer clusters and huge amounts of disk storage to study everything from genomics,
drug interactions, weather and climate, nanoscale technologies, marketing, and economics. Video is indispensible, for educational content delivery, day-to-day communications, entertainment, and so on, and before long todays high definition video
content will give way to ultra high definition, creating an even larger demand for
high-speed broadband networks.
Our choice to use dark fiber and optical networking technology was both deliberate and by design. Fiber optic cable provides enormous capacity and scalability.
Today our members enjoy connection speeds up to 10 gigabits per second. Current
technology enables us to increase this to 100 gigabits per second simply by swapping
out electronics on the ends of the fiber, and technology is in development to raise
the bar to terabit speeds. Our goal has been to build network infrastructure that
not only meets the needs of today, but also has the scalability and flexibility to meet
the needs of our members well into the future.
In 2010 the University of Arkansas System received a $102 million grant 1
through the U.S. Department of Commerce under the National Telecommunications
and Information Administrations (NTIA) Broadband Technology Opportunities Program (BTOP). AREON is a sub-recipient of that grant, receiving $41.2 million to
expand its existing fiber optic network to connect one additional four-year public
university and twenty-two (22) two-year community colleges. In addition, the ARE
ON fiber optic infrastructure provides a backbone network over which the University of Arkansas for Medical Sciences, as primary grant recipient, has connected
over 450 healthcare institutions statewide to form the Arkansas e-Link Network.
Our use of wave division technology in the optical network enables us to overlay
multiple networks across our backbone, such as Arkansas e-Link, via dedicated, secure links.
The AREON network currently has over 2,200 miles of fiber optic cable extending into five states. Much of this cable comes from commercial fiber optic cable providers and telecommunications companies, although AREON has itself constructed
nearly 100 miles of its own fiber to connect the leased intercity cables to our university and college campuses.
I want to point out that AREON would not be possible today without access to
the dark fiber from its commercial providers. The costs for overbuilding these providers are simply too high and doing so would have not served the best interests
of the citizens of this state. When AREON first approached providers in search of
available fiber optic cable, there was much skepticism about the mission and intent
of our organization. Some companies expressed concern that AREON was going
into competition with them, ultimately resulting in loss of their customers and revenue. We believe that the opposite has been the experience, however.
Throughout the development of the AREON network, especially with the expansion of the network through the BTOP grant, our providers have benefited substantially from the investments and funding received through AREONs long-term capital leases of dark fiber. Those investments have enabled providers to construct
more fiber optic cable to extend their networks, to reach more customers, to access
more affordable providers of telecommunications and Internet services, and to provide better rates and service to their customers. While AREONs ultimate goal has
been to form a network for the benefit of its higher education institutions, the commercial and residential customers of our providers have received benefits also. In
many cases, these customers are exactly the underserved and unserved population
of broadband users in rural areas that BTOP targeted.
It is our opinion that public policy and funding for national and state broadband
initiatives should leverage public/private partnerships to successfully accomplish the
ambitious goals set forth through the National Broadband Plan. Just as AREON
has done in addressing the broadband needs of its higher education members
through its partnerships with commercial cable providers, we encourage use of similar partnerships to provide capital and incentives for expansion of broadband into
the rural areas of the state, to use fiber swaps and peering arrangements to exchange facilities and network traffic between public and private entities, and to leverage the strengths of commercial providers for middle-mile and last-mile connections.
Today, AREONs member universities and colleges enjoy a level of service previously not available to them. AREON continues to look for innovative ways to ex1 Broadband Technology Opportunities Program (BTOP) Arkansas Healthcare, Higher Education, Public Safety and Research Integrated Broadband Initiative Project, Grant Award #
NT10BIX5570102.
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pand its ability to provide scalable, reliable, and secure broadband services to its
members and to leverage its infrastructure to benefit all citizens of the State of Arkansas.
Conclusion
It has been my honor to provide testimony on our efforts for the members of the
Arkansas Research and Education Optical Network. Thank you for the invitation
and opportunity to speak on this very important issue, and I would be happy to answer any questions.

Ms. Harriman?
STATEMENT OF HARRIMAN, DIRECTOR OF POLICY
AND SPECIAL PROJECTS, ARKANSAS DEPARTMENT OF
EDUCATION AND COORDINATOR OF STEM WORKS, STATE
OF ARKANSAS ON BEHALF OF THE FAST ACCESS FOR
STUDENTS TEACHERS AND ECONOMIC RESULTS
(FASTER) ARKANSAS COMMITTEE
Ms. HARRIMAN. Thank you.

Good morning. Thank you, Mr. Chairman, for the opportunity to
speak on behalf of Fast Access for Students, Teachers, and Economic Results for Arkansas.
For the last several years, I have been working with Governor
Mike Beebes Workforce Cabinet on the STEM Works initiative, an
initiative designed to strengthen science, technology, engineering,
and math education in Arkansas. Today, we have almost 15 percent of high schools signed up for STEM Works and three universities implementing the UTeach teacher preparation model, which
is wonderful.
But we have found that schools that wanted to participate in
STEM Works sometimes couldnt because they lacked adequate
broadband. So we started looking at broadband capacity around the
entire state. How did we fare? The short answer was not well.
Last year, the 2012 Digital Learning Now report from the
Foundation for Excellence in Education gave Arkansas an F for
digital learning opportunities. TechNets 2012 Broadband Index
listed Arkansas as 50th among all states for broadband access. The
Arkansas Association of Educational Administrators surveyed its
members in 2011 and found that 78 percent wanted to implement
technology initiatives but couldnt due to bandwidth limitations.
Preparing students to be competitive in the 21st-century global
economy is an imperative in any state, but in states with many
poor and rural students 21st-century schools not only prepare the
workforce but help reduce the burden of poverty and isolation.
Arkansas faces the same challenges as other rural states working to increase broadband access. Service providers see expanding
to low-population-density areas as cost-prohibitive. Construction
and monthly service costs are too high for small communities to absorb. Local network infrastructure may be outdated. And there is
a lack of sufficient technical expertise at the local level.
However, none of that is stopping the state from moving forward.
The General Assembly passed Act 1280 of 2013 that requires high
schools to offer one or more digital learning courses beginning in
2014 and 2015. The legislation also directs the state to study the
broadband necessary to deliver quality digital learning. The report
to the legislative leadership is due December of this year.
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FASTER Arkansas was formed at the request of Governor Beebe
and includes representatives from cable, telephone, and fixed wireless companies, secondary and post-secondary education, each of
Arkansass United States Senators, and, maybe most importantly,
industry and business leaders, who recognize that the development
of a strong broadband public policy is vital not only for the educational advancement of our students but is also vital for the economic growth and advancement of our state.
By working together, we believe that FASTER can put forth, in
a unified voice, public policy proposals to be considered by both the
legislative and executive branches of our government.
Arkansas is moving forward and making progress, but we need
help. Arkansas needs access to funding for the middleand lastmile build-out; access to funds to build and upgrade local area networks and provide technical support; a simplified, revenue-stable
E-Rate program that prioritizes applications for regional educational consortiums, including Arkansas educational cooperatives;
and ongoing support for digital learning.
Mr. Chairman, many of our districts are losing residents. When
this happens, students either miss out on opportunities to take
high-level courses or districts are forced to consolidate. This endangers the rural way of life and limits economic opportunities for our
state. Broadband expansion offers ways to stem the tide, and
FASTER Arkansas is committed to being part of the solution.
Thank you for your interest in this important issue.
[The prepared statement of Ms. Harriman follows:]
PREPARED STATEMENT OF SUSAN HARRIMAN, DIRECTOR OF POLICY AND SPECIAL
PROJECTS, ARKANSAS DEPARTMENT OF EDUCATION AND COORDINATOR OF STEM
WORKS, STATE OF ARKANSAS ON BEHALF OF THE FAST ACCESS FOR STUDENTS
TEACHERS AND ECONOMIC RESULTS (FASTER) ARKANSAS COMMITTEE
Good morning. Thank you Mr. Chairman for the opportunity to speak on behalf
of the Fast Access for Students Teachers and Economic Results (FASTER) Arkansas
committee, which is focused on broadband expansion.
For the last several years, I have been working with Governor Mike Beebes
Workforce Cabinet on STEM Works, an initiative to strengthen Science, Technology,
Engineering and Math education in Arkansas. STEM Works subsidizes project-and
problem-based learning programs for high school and college students. Today, we
have almost 15 percent of high schools signed up for a STEM Works program and
three universities implementing the UTeach teacher preparation model, which is
wonderful. But we found that schools that wanted to participate in STEM Works
sometimes couldnt because they lacked adequate broadband infrastructure.
So we started looking at broadband capacity across the entire State. How did we
fare in the global bandwidth arms race? The short answer was not well.
Last year, the 2012 Digital Learning Now report from the Foundation for
Education Excellence in Education gave Arkansas an F for digital learning opportunities.
TechNets 2012 Broadband Index listed Arkansas as 50th among all states for
broadband access.
The Arkansas Association of Educational Administrators (AAEA) surveyed its
members in 2011 and found that 80 percent of district administrators experienced problems with bandwidth in the previous year, 78 percent wanted to implement technology initiatives but couldnt due to bandwidth limitations, and
84.5 percent had to restrict access to educationally-relevant or useful sites due
to bandwidth concerns.
Now, it hasnt always been this way. Arkansas was among the first states to recognize the importance of broadband, providing all schools connections to the Arkansas Public School Computer Network in 1992.
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Multiple public boards, commissions, and task forces have been created at the
state level to research, strategize, advocate and propose broadband solutions, but
they have achieved limited results. Differing business models, numerous provider
territories, divergent constituency interests, inadequate funding, market realities,
and the absence of strong, visionary leadership were obstacles to moving forward.
Arkansas has not ignored broadband expansion but progress has been slow and
unsteady.
Challenges for Rural States
Preparing students to be competitive in the 21st Century global economy is an
imperative in any state. In states with many poor and rural students, 21st century
schools not only prepare the workforce, but help reduce the burden of poverty and
isolation. Meeting this imperative is a special challenge in places where people are
relatively poor and distances between them are relatively large.
Arkansas faces the same challenges as other rural states working to increase
broadband access to schools:
Service providers see expanding to low population density areas as cost-prohibitive;
Construction and monthly service costs are too high for small communities to
absorb;
Local network infrastructure may be outdated; and
The lack of sufficient technical expertise at the local level.
Arkansas Is Moving Forward
However, none of that is stopping the state from moving forward.
Everyone involved recognizes the potential benefits of effective digital learning:
1. Students can learn anytime, anywhere, including online, blended or hybrid
classrooms, or through digital content.
2. Teachers can use real-time data and adaptive software to individualize instruction for each student and help them reach their full potential.
3. Teachers can use digital learning and technology to participate in professional
development and enhance their skills.
4. Students will gain access to courses and expertise that is not available at their
local school.
The possibilities are endless.
The General Assembly passed Act 1280 of 2013 that requires high schools to offer
one or more digital learning courses beginning with the 20142015 school year. The
legislation also directs the state to study the broadband necessary to deliver quality
digital learning to each school district. The report to legislative leadership is expected in December 2013.
FASTER Arkansas was formed at the request of Governor Beebe and includes
representatives from cable, telephone and fixed-wireless companies, secondary and
post-secondary education, each of Arkansas United States Senators, and maybe
most importantly, industry and business leaders who recognize that the development of strong broadband public policy is vital not only for the educational advancement of our students but is also vital for the economic growth and advancement of
our state. By working together, we believe that FASTER can put forth, in a unified
voice, public policy proposals to be considered by both the legislative and executive
branches of our government.
How the Federal Government Can Help
Arkansas is moving forward and making progress but will need help. Arkansas
needs:
1. Access to funding for middle and last mile build/out. In some locations, the
cost of middle mile and last mile build/out of broadband infrastructure is cost
prohibitive. A retooled E-Rate program could better subsidize and prioritize
this work.
2. Access to funds to build or upgrade local area networks and provide local technical support. Aging schools may not have the necessary local network infrastructure or technical talent to take advantage of high speed broadband, even
if its available.
3. A simplified, revenue-stable E-Rate program that prioritizes applications from
regional educational consortiums, including Arkansas Educational Cooperatives. This would encourage the development of more comprehensive, regional
solutions and greater economies of scale for purchasing and construction.
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4. Ongoing support for digital learning. Having Federal officials talk about the
importance of digital learning and broadband expansion helps drive home the
importance of this issue.
Mr. Chairman, Arkansas is a rural state. Many of our school districts are losing
residents and when this happens, students either miss out on opportunities to take
high-level courses, or districts are forced to consolidate. This endangers the rural
way of life and limits economic opportunities for our state. Broadband expansion offers way to stem the tide and FASTER Arkansas is committed to being part of the
solution.
Thank you for your interest in this important issue.

Mr. Zimmerman?
STATEMENT OF LANG ZIMMERMAN, COMMISSIONER,
ARKANSAS ECONOMIC DEVELOPMENT COMMISSION AND
VICE PRESIDENT, YELCOT COMMUNICATIONS
Mr. ZIMMERMAN. Thank you, Mr. Chairman, for inviting me to

participate in my dual role as a Commissioner on the Arkansas
Economic Development Commission and also as a broadband provider in rural north-central Arkansas through my family company,
Yelcot Communications.
I appreciate you holding this field hearing back in Arkansas also,
where the businesses run the gamut from small mom-and-pop all
the way up to the worlds largest retailer. Every entity throughout
this gamut relies not only on the availability of broadband networks but also their robustness and reliability. And beyond the
business world, where the AEDC focuses, the sectors of government, medicine, education, agriculture, and nonprofits have similar
requirements.
AEDCs primary goal is recruitment of new businesses to the
state and the retention and expansion of those already here. And
in recent years, redundant fiber networks have become as important to business site-selection experts as redundant power supplies.
Businesses need to retain connectivity to internal and Web-based
networks on a continual and reliable basis.
And it is not just big businesses; small, rural firms making niche
products without a brick-and-mortar storefront rely on their
Websites for order taking, processing, and delivery. If the Internet
is down, their entire business is down because all their sales are
online.
An excellent example is the pending Big River Steel mill in Osceola, Arkansas. This project represents a $1.1 billion investment in
Arkansas and the promised creation of 525 jobs with an average
salary of $75,000 a year.
In talking to the AEDC project manager in preparation for this
hearing, I made the comment that Big River Steel probably didnt
have a big need for broadband. I learned in a hurry that the mill
is being constructed by the German steel mill specialist company
SMS Siemag, whose engineers will be performing diagnostic testing
and receiving online streams of reports from the mill equipment
here in Arkansas.
Speaking now as a provider, I can tell you that the recent
changes to the Federal Universal Service Fund, USF, and the
intercarrier compensation, or ICC, mechanisms have put a big
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damper on the expansion of broadband investment from telephone
companies like Yelcot.
The FCCs USF and ICC transformation order and subsequent
follow-on proceedings haveor are proposed tosignificantly
changed how rural rate-of-return telecom providers recover their
costs. Some of the reforms proposals include caps on costs that can
be included in the calculation of USF support, phased-down payments from long-distance providers for access to the local network,
increased broadband requirements, and reduction in the rate of return that companies are authorized to earn on their investments.
The caps depend not just on investments individual companies
make but also on what investment is made by other companies
across the country. A company has no way of knowing if any investment puts them in a position to be capped and lose support.
In addition, the FCC has begun the process of reevaluating the rate
of return that rural telephone companies are authorized to earn on
their investment, including a proposed significant reduction in the
current authorized rate of return.
This lack of predictability in the application of the new caps on
support and the reduction in revenue makes investment risky and
has started a race to the bottom, rather than give companies the
regulatory certainty we need to make the enhancements to our
broadband networks that are necessitated by the transformation
order.
Mr. Chairman, thank you for giving me this opportunity to address the Committee.
[The prepared statement of Mr. Zimmerman follows:]
PREPARED STATEMENT OF LANG ZIMMERMAN, COMMISSIONER, ARKANSAS ECONOMIC
DEVELOPMENT COMMISSION AND VICE PRESIDENT, YELCOT COMMUNICATIONS
Thank you, Mr. Chairman, for inviting me to participate in my dual role as a
Commissioner on the Arkansas Economic Development Commission and as a
broadband provider in rural north-central Arkansas through my family company
Yelcot Communications.
I appreciate you holding this field hearing back in Arkansas where the businesses
run the gamut from small mom-and-pop up to the worlds largest company. Every
entity throughout this gamut relies not only on the availability of broadband networks, but also their robustness and reliability. Beyond the business world, where
the AEDC focuses, the sectors of government, medicine, education, agriculture, and
non-profits have similar requirements.
AEDCs primary goal is the recruitment of new business to the state and the retention and expansion of those already here. In recent years redundant fiber networks have become as important to business site selection experts as redundant
power supplies. Businesses need to retain connectivity to internal and web-based
networks on a continual and reliable basis. And its not just big businesses; small
rural firms making niche products without a brick-and-mortar storefront rely on
their websites for order taking, processing, and delivery. If the Internet is down,
their business is down because all of their sales are online.
An excellent example is the pending Big River Steel Mill in Osceola, Arkansas.
This project represents a $1.1 billion investment in Arkansas and the promised creation of 525 jobs with an average salary of $75,000/year. In talking to the AEDC
project manager in preparation for this hearing, I made the comment that Big River
Steel probably didnt have a big need for broadband. I learned in a hurry that the
mill is being constructed by the German steel-mill specialist company SMS Siemag,
whose engineers will be performing diagnostic testing and receiving online streams
of reports from the mill equipment in Arkansas. There is no way the owners of a
$1.1 billion steel mill would want production halted because of a bad Internet connection.
Speaking now as a provider I can tell you that the recent changes to the Federal
Universal Service Fund (USF) and Intercarrier Compensation (ICC) mechanism
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26
have put a big damper on the expansion of broadband investment from telephone
companies like Yelcot. The FCCs USF and ICC Transformation Order and subsequent follow on proceedings have, or are proposed to, significantly changed how
rural rate-of-return telecommunications providers recover their costs. Some of the
reforms and proposals include: caps on costs that can be included in the calculation
of USF support; phased down payments from long distance providers for access to
the local network; increased broadband requirements; and reductions in the rate of
return that companies are authorized to earn on their investments. The caps depend
not just on investment individual companies make, but also on what investment is
made by other companies across the country. A company has no way of knowing if
any investment puts them in a position to be capped and lose support. In addition,
the FCC has begun the process of re-evaluating the rate of return that rural telephone companies are authorized to earn on their investment, including a proposed
significant reduction in the current authorized rate of return. This lack of predictability in the application of the new caps on support and reductions in revenue
makes investment risky, and has started a race to the bottom, rather than give companies the regulatory certainty we need to make the enhancements to our
broadband networks necessitated by the Transformation Order.
Thank you for giving me this opportunity to address the Committee.

Mr. Hall?
STATEMENT OF JEFFERY HALL, ASSOCIATE DIRECTOR OF
GOVERNMENT AFFAIRS, ARKANSAS FARM BUREAU
Mr. HALL. Mr. Chairman, thank you for the opportunity to testify today and talk about agriculture and how it benefits from rural
broadband. I am the Associate Director of Governmental Affairs for
Arkansas Farm Bureau and a cow-calf producer myself.
Agriculture is Arkansass largest industry. For agriculture to continue to lead our states economy, it needs viable rural communities
to supply the services needed to support their families and small
businessesno different than the 1930s with the need of electricity
and telephone services in rural areas, which was accomplished by
a successful public-private partnership.
The obstacle then was the problem of distribution. How could we
get the much-needed electricity and telephone service to homes in
rural areas? The problem of access is the same for rural broadband.
To thrive, rural areas need access to health care, government services, and educational and business opportunities.
Precision agriculture technologies have made farmers more efficient today. The use of GPS and auto-steer guidance systems are
two types of precision agriculture used to increase crop yields,
lower cost, and reduce chemical use, which benefits the environment.
The two types of technologies work together, helping farmers
identify precisely where to plant seeds and how many seeds and,
if needed, apply variable rates of pesticides and fertilizer. Autosteer on tractors is not hands-free, but it allows farmers to drive
equipment in straight lines while reducing fatigue. It also ensures
consistency when different people take turns in the drivers seat.
The livestock sector also utilizes technology and has increasing
need for better services. Today, poultry farmers use monitoring systems to provide added protection for birds. Cattle are being sold
through the video auctions and the ability to place bids from your
smartphone or computers.
The online marketplace has a great impact on the cattle industry. Farmers are able to research information about herd manage-
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ment and cattle markets. It is fair to say that farmers now buy and
sell cattle all over our country. With online access, the perfect herd
sire might be found hundreds of miles away. The Internet also allows cattlemen to find the right point of sale for their animals
going to market. With the local auctions disappearing, this has
never been more important than today.
In order to get high-quality, affordable service to the last mile,
there must be cooperation between public and private interests. It
is important that we continue to work together to resolve the
issues that hinder the Internet service for all rural Arkansans.
Thank you for having us this morning.
[The prepared statement of Mr. Hall follows:]
JEFFERY HALL, ASSOCIATE DIRECTOR OF GOVERNMENTAL AFFAIRS,
ARKANSAS FARM BUREAU
Mr. Chairman and Members of the Committee, thank you for the opportunity to
testify today.
My name is Jeffery Hall. I am the Associate Director of Governmental Affairs for
Arkansas Farm Bureau and a cow-calf producer.
Arkansas agriculture needs viable rural communities to supply the services needed to support their families and small businesses. This is no different than in the
1930s with need for electricity and telephone service in rural areas. This was accomplished by a successful public-private partnership.
The obstacle then was the problem of distribution. How could we get the muchneeded electricity and telephone service to the homes in rural areas? The problem
of access is the same for rural broadband.
To thrive, rural areas need access to health care, government services, and educational and business opportunities. For many rural communities, access can only
be gained by using broadband services and sophisticated technologies that require
high-speed connections. Rural business owners need access to new markets and employees for their businesses. Rural health care providers need access to health information technology. Rural students need access to educational resources and continuing education opportunities. Current and future generations of rural Americans
will be left behind their fellow citizens if they are without affordable high-speed
broadband opportunities.
The Small Business Administration conducted a study in 2010 that evaluated the
methods used by small businesses to access broadband services and the impact of
broadband on small businesses. The study found that broadband service is vital for
small businesses in achieving strategic goals, improving competitiveness and efficiency, reaching customers, and interacting with vendors. Farmers and ranchers in
rural America rely on broadband access to manage and operate successful businesses, the same as small businesses do in urban America. Access to broadband is
essential for farmers and ranchers to follow commodity markets, communicate with
their customers, gain access to new markets around the world and, increasingly, for
regulatory compliance.
Many farmers and ranchers conduct their business operations from their homes.
The U.S. Department of Agriculture reports a total of 62 percent of U.S. farms had
Internet service in 2011, compared with 59 percent in 2009. This upward trend of
Internet access must continue if farmers, ranchers and other small businesses in
rural America are going to thrive and be successful in a global economy.
Precision agriculture technologies are used by about 50 percent of U.S. farmers
and ranchers. GPS and auto-steer guidance systems are two types of precision agriculture used to increase crop yields, lower costs and reduce chemical use, which benefits the environment. These two types of technologies work together, helping farmers identify precisely where to plant seeds and how many and if needed, apply variable rates of pesticides and fertilizer. Auto-steer on tractors is not hands free, but
it allows farmers to drive equipment in straight lines while reducing fatigue. It also
ensures consistency when different people take a turn in the drivers seat.
Livestock sector also utilizes technology and has increasing need for better service.
Todays poultry farmer uses a monitoring system to provide added protection for
the birds. The first is the main controller unit, which controls and monitors all operations of the two houses. It monitors the power and records temperature, humidity,
water usage and exhaust fan run time, as well as other conditions. The second sys-
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tem is the SCADA 3000 system, which monitors the performance of the main controller as well as specific environmental conditions like temperature, humidity, carbon dioxide levels and ammonia on the floor. This Sensaphone system monitors 48
parameters daily, collecting data on each parameter every minute and logging that
data on a computer. The data is accessible through remote locations for snapshots
of live conditions and trends.
Cattle are being sold through video actions with the ability to place bids from
your smart phone or computer. The online market place has had a great impact on
the cattle industry. Farmers are able to research information about herd management and cattle markets. It is fair to say that farmers now buy and sell cattle all
over the nation? With online access, the perfect herd sire might be found hundreds
of miles away. The Internet also allows cattlemen to find the right point of sale for
their animals going to market. With the local auctions disappearing this has never
been more important.
Another element that farmers and ranchers and all residents of rural America
must consider is that the world communicates differently with the rise of the Internet. If elected officials are going to correspond with constituents via e-mail and the
Web, then rural America must have access to the Internet. The immediacy of communication in todays world will leave farmers and ranchers behind if they cant
have the same tools of advocacy that their more urban counterparts enjoy.
The importance of agriculture and its needs are critical to everyone. The U.N.
Food and Agriculture Organization estimates that farmers will have to produce 70
percent more food by 2050 to meet the needs of the worlds expected population of
9 billion people. To meet that goal farmers and ranchers must have access to the
technology, information and markets. Providing access to high quality and affordable Internet is a part of that equation.
Farm Bureau supports using the Universal Service Fund (USF) to expand
broadband deployment to rural areas. The first phase of USF reform was the creation of the Connect America Fund (CAF) to replace the current high-cost program
that subsidizes telephone service. The CAF will begin to subsidize the deployment
of broadband this year.
Internet providers are racing to work through the problems of service deficits. In
order to get high quality and affordable service to the last mile, there must be cooperation between public and private interests. It is important that we continue to
work together to resolve the issues that hinder better Internet service for rural Arkansas.

And, Mr. Hall, let me start my first question with you. You
know, agriculture is our number one industry. You talk about the
innovations and the new technologies that are there.
Is it a hindrance for farmers around the state no matter what
kind of farm they are, to live in a rural area if they cant have access to the Internet?
Mr. HALL. I believe that it would be a hindrance for them to increase their production and become more efficient.
So we need to continue that. I know in certain places in Arkansas it is easier to get the type of high-quality service so that they
can utilize those technologies so that they can grow. Margins in agriculture are extremely narrow, and for the precision agriculture,
to really reduce that and be able to farm more acres I think would
be a benefit.
Senator PRYOR. And I assume you are just going to see technology continue to grow in agriculture. Is that fair?
Mr. HALL. Yes.
Senator PRYOR. Yes.
Mr. Zimmerman, let me ask you, you mentioned the Big River
Steel project. And given your work on the AEDC, how often do
these companies that you are recruiting and that you are talking
to, how often do they mention the need for broadband? Why is that
so important to them?
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Mr. ZIMMERMAN. I will tell you, I talked with the staff before the
hearing just to get an idea from the actual staffers that deal with
business recruitment on a global basis, that exact question: How
often do these companies ask about broadband? Is it half the time?
And the word I got back was it is a lot more than half the time.
And what they are particularly interested in is redundant networks so that if a cut is made going east of town, they can still
route traffic out to the west. And the redundancy really adds to the
reliability.
You still see newspaper articles or hear TV stories these days
about a single fiber cut in between city X and city Y knocks out
telephone, cable, and Internet service for hundreds or thousands of
people for 10 to 12 hours at a time because they have to go splice
that thing back.
We had something happen outside of Stone County in Mountain
View, Arkansas, where we had a major fiber running through
there, and it got cut in the middle of the night. And we dont know
of any construction going on. And it turned out a farmer, his dog
died; he went out with a backhoe to dig a grave for the dog and
dug up our fiber, buried the dog, and we had to go and find where
the loose dirt was to get fiber turned back on for these people.
So that is why it is important to have these redundant routes
out.
Senator PRYOR. Yes, interesting. Okay, so this has become a
major component part of getting companies to locate here and
keeping them here and keeping them coming.
Mr. ZIMMERMAN. Absolutely. The reliability or the ability to have
a ring around the metropolitan areas or where they are looking to
locate is very essential.
Senator PRYOR. Ms. Harriman, let me ask you, I know that, in
Arkansas, obviously, economic development is important, but a big
piece of that is also education. You know, there is a direct tie there.
And your group is working apparently very well and making good
progress and you are moving forward, and all that is very exciting.
And it looks like you are going to continue to do good things there.
But let me ask about the E-Rate program that I know the FCC
is discussing right now. Are there changes that you would like to
see that would benefit Arkansas in the E-Rate program?
Ms. HARRIMAN. Very much so.
I just started learning about E-Rate in March when this problem
emerged in our office, and one of the first things I did was ask for
a copy of the states E-Rate application. And it was over 300 pages
and took months and months and months of work. I think Becky
Rains is here, who helped put that together. There are five or six
forms that have to be turned in at certain deadlines.
And not only is the paperwork very hard to understand and the
process is very difficult, but the actual follow-through and not
knowing whether or not what you want to have funded is going to
even be funded, and then having to have the seed money to get the
rebate back. It seems like a very huge barrier for districts and for
states to have to deal with as they are trying to increase access to
broadband.
Senator PRYOR. OK.
Are you all in the process of revising that right now, the E-Rate?
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Ms. ROSENWORCEL. Yes, E-Rate is a wonderful program. It is a
tremendous equalizer for small and rural schools to be able to get
high-speed broadband. But we do have a problem, and you hit the
nail on the head. We have made the program so complicated that
small and rural schools are having a hard time applying. So it is
my hope, as we revisit this program this year, we are going to address that head-on.
Ms. HARRIMAN. Thank you.
Senator PRYOR. Mr. Merrifield, let me ask you a kind of a related
question. And that is, your program that you talked about, ARE
ON, what do we need to see just to continue to have AREON get
stronger and more relevant and, you know, just continue to move
in the right direction?
Mr. MERRIFIELD. Well, ARE-ON network itself is established. We
have built our network; we have connected to colleges and universities. We have a significant infrastructure that is state-based and
state-funded in place. And, certainly, that infrastructure should be
leveraged to its greatest degree for any efforts that have to do with
public policy or public funding here in Arkansas.
You know, our focus is on higher education today. There are
great needs in many other areas. And so I would offer that the Arkansas Research and Education Optical Network should provide infrastructure in some fashion to help alleviate some of the problems
we have here in the state.
Senator PRYOR. And so, for your average studentis part of this
that they can take classes online?
Mr. MERRIFIELD. Yes, sir. And the broadband that we provide
our colleges and universities are really just part of the problem.
You know, the other half of that is that students who live at home
who need to take courses need to have access to broadband and be
able to get video content or coursework content from their local colleges or even colleges across the state.
And so we are only a part of the solution. And, you know, the
broadband development that we have done has enabled, through
our funding, has enabled local providers or other providers that are
represented in this room to increase the size and improve their networks so that they can provide better service to their subscribers.
Senator PRYOR. Mr. Walls, let me ask you, because Mr.
Merrifield is touching on something thatyou said in your testimony there are a lot of people in our state that may have access
to broadbandand, again, some of that is going to be the definition
of broadband and what is adequate, but, nonetheless, they have
access, but they dont utilize it.
And tell us why they dont utilize it. And what can we do to try
to make sure that if they want it they can have access to it?
Mr. WALLS. Well, again, if they dont access itlets assume for
a momentI mean, the things we have done at Connect, taking the
next step, I mean, in pricing, those are the conversations you are
having right now. And, again, as networks expand, I think those
issues start resolving themselves. You actually see service providers now doing some programs and advertising them to help lowincome people get access. So I think it is a need that we are starting to recognize and get our hands around.
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Things we have doneand, again, you have seen these around
the nationon the equipment, where we have done free or reduced-cost refurbed computers to kids on free or reduced lunch programs. I think there are a lot of opportunities there to try toyou
know, those specific ones on access.
Then you get on the other side, the lack of broadband education.
For those that want to do it but are intimidated by the process,
again, it is outreach to those particular groups. It is working with
groups like the Farm Bureau group and classes and things along
those lines to farmers looking to, how do we use this technology
better?
Senior citizens groups, the school system. You know, hopefully it
is improving within the school system so that the younger generation is getting a lot of access to it. But for a state like Arkansas
that has unfortunately a large percentage of people with only a
high school education that graduated before, really, the computer
generation, a lot of themand they are not necessarily using them
in their jobs. So how do we find those opportunities to find the relevancy in their life to show, hey, this is something that is interesting?
And it can be as simple, candidly, I mean, with hunting, you
know, getting licenses online. I mean, you have to findfor us,
Connect, it is I think kind of the mantra: Give us 5 minutes and
we will figure out where it is relevant in your life for someone who
is adamant that it is not. And so you try to push it from that side
of the equation.
And it is a process. Again, it is a grassroots-type effort. But,
again, it yields a pretty good dividend on our end, as far as, you
know, getting that take rate up. And I think any service provider
would tell you, particularly in some of these more rural areas, that,
hey, if we could get better take rates, it certainly gives a nice incentive to maybe improve what we are able to do, maybe bring in
more competition.
Senator PRYOR. And remind the Committee again what the take
rate is in Arkansas?
Mr. WALLS. You know, it depends on what number you are at.
I think you used the 40-something percent. We actually have a
70I think it is like 78 percent. But, that said, when you include
mobile/wireless and you get intoit depends on what numbers you
want to use. But I think for the wireline it is below 50 percent. But
in some communities, heck, it is 10 percent, it is 12 percent, it is
way below what we need it to be.
And I go back to the economic development statement. You are
hearing fromAEDC is hearing from the companies that look at us
and say, OK, is there broadband? I think from a larger perspective, maybe the perception of Arkansas has driven it in part. And
if someone from another state looks and maybe has a preconceived
notion of what Arkansas is or is not because of our history or we
are in the South or whatever, the things that come along with regionalism, and then you look and you see a take rate at 45, 46 percent, that may reinforce a particular perception that maybe even
before they would even considerthey wouldnt even consider coming here.
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And I think if you can improve those types of numbers, you
maybe have the opportunity to again shatter some perceptions of
what Arkansas is or is not and maybe have more people look at us
as an opportunity to do business here.
Senator PRYOR. And part of this is the availability of technology,
but part of it is just the cost to the end user, right? It is just hard
for a lot of our people in this state to afford.
Mr. WALLS. It is.
Senator PRYOR. You know, just bottom line.
Mr. Manley, let me ask you about what you were saying earlier
about. You know, you talked about having good news. And that is
good news, what you shared with us today and some of the examples you gave us. It is great news.
But when you are doing what you are talking about, is that more
like a hospital-to-hospital communication? Do doctors have access?
Or does the general public, are they able to access what you are
talking about?
Mr. MANLEY. Basically, the BTOP Arkansas e-Link program is
the middle-mile project that we built, as far as the healthcare system. So it is hospital-to-hospital, clinic-to-hospital.
But we have made it in such a fashion that, you know, they say,
Is there an app for that? Guess what? There is an app for that.
So from my iPad, I can now have access to any of these institutions, the hospitals, clinics, that we have access to now over the
video network to be able to see those patients, be able to talk to
the hospitals management, and different things like that.
One of the newest programs we are going to have is we have 11
hand surgeons across the state of Arkansas to handle all the trauma here. So our trauma is going to be one of our biggest programs
being built. So now they are going to have access, wherever they
areit doesnt matter if they are in-state, out-of-state, or whateverbut in-state, they will have access to be able to evaluate
those patients.
At a patient level, it is coming. Because there are thousands of
mobile apps that are coming out every day. I am a Type 1 diabetic.
If I need access to my healthcare provider, I am going to be able
to do it from my phone.
And so that is kind of thepeople called it the last mile when
it comes to electricity. We consider this the first mile to the patient.
And that is going to be the next largest growth that we see, I
think, in the near future.
Senator PRYOR. Good.
I was just at the VA up in Fayetteville and they have added a
new wing up there. And they were showing us that, that the VA
has this system now whereI think some of it may be iPad- or tablet-based, some may be on a computer, and for some of it they may
actually have to give you a little device of some sort, I am not quite
sure. But it helps them provide just basic services to veterans, and
it can be things like blood pressure and weight and just some of
your real basics.
But the fact that you are saving the veteran the hours and hours
of leaving their home, wherever they are, usually fairly remotely,
and getting into a place like the Fayetteville hospital and do all
that it is just a way to get efficiency. And it keeps a lot of folks
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who dont need to be traveling and the stress of getting up and
down and in and out, just keeps them, you know, where they need
to be.
So, yes, the technology is great.
Mr. MANLEY. We would love to partner closer with the VA and
expand our program here in Arkansas. So instead of someone, like,
from Mountain Home having to travel to Fayetteville, they could
actually receive that care there in Mountain Home because of the
infrastructure we have put in now. And we would be more than
happy to work with them on any level to be able to make sure our
veterans get that care closer to home.
Senator PRYOR. That would be great.
Lets see now. We have just a few more minutes with this panel,
and I know we have covered a lot of ground, and I am wondering
if any of the panel want to chime in. If they want to respond or
say something about something they have heard or something they
have thought of that either we havent covered orwe would like
to get your thought on that.
Anybody? Anybody have anything to add?
All right, well, listen, what we will do then is we will swap out
this panel and we will let our next panel come up. And our guys
here are going to do that real quickly.
Let me say thank you to all the panelists. And you all know this
is the hearing but we are going to continue to talk and we are
going to continue to try to find ways to help you make this a reality
of just getting more and more of this all over Arkansas. So thank
you very much for doing this and for preparing and being here.
And we will get our team here to swap out the nametags and all
that, and we will move forward.
Thank you.
And we will bring our next panel up here in just a minute, once
they get this swapped out.
While they are doing that, let me say that I know Senator Bozeman has someone here. I dont see anyone else from the other Arkansas offices, but I know Senator Bozeman wanted to send someone here to listen and be part of this. So thank you to the Bozeman
office for being here.
If the other panelists could come on up and grab a seat once we
are ready. And it looks like we are getting ready.
I will go ahead and run through the names of the witnesses here
as they are getting situated. And we will try not to waste anyones
time on doing this.
So our second panel will be Dean Kurtz. He is the Vice President
of the Southern Region with CenturyLink. Elizabeth Bowles, who
is with Aristotle. Jeff Gardner, who is President and CEO of
Windstream. That is the Fortune 500 company I mentioned a few
moments ago, and many of you all are very familiar with
Windstream. Greg Ashcraft, he is with South Arkansas Telephone.
Always great to have him here. John Strode; John testified before
us in one of our other committee hearings that we talked about. He
is with Ritter. Steve Sanders, who is here from NATCO, another
great Arkansas company. Eddie Drilling of AT&T, and we appreciate Eddie being here. And Eddie, by the way, has a great reputation not just here in Arkansas but around the country with AT&T.
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I talk to his people in Washington a lot. And Dean Taylor with
Verizon Wireless, South Central Region, located here on Alltel
Drive.
So let me do this. Let me just, for the ease of this, why dont I
start with Mr. Gardner and let you jump in. And if we can limit
our comments to 3 minutes. And, again, there is this little button
on the table there. Just press that button when you begin, and
then turn it off when you end.
Go ahead, Mr. Gardner. Thank you.
STATEMENT OF JEFF R. GARDNER, PRESIDENT AND CHIEF
EXECUTIVE OFFICER, WINDSTREAM CORPORATION
Mr. GARDNER. Thank you, Mr. Chairman, for your leadership on

communications.
Windstream started in 1948 as a local phone company in Sheridan, Arkansas. Sheridan is typical of the areas we serve, which include some of the most remote areas in the nation. In markets like
Little Rock, Windstream is a competitive carrier, going head-tohead with the largest incumbent phone companies as well as incumbent cable companies.
Linking our urban and rural markets is the Windstream network
and associated infrastructure, including more than 20 data centers
that support cloud-based storage services. Our network includes
115,000 miles of fiber-optic cable, enough to circle the Earth four
and a half times.
Educational institutions are important Windstream customers.
For example, we deliver 1-gigabit service to both North Little Rock
high schools. Windstream understands the potential of replicating
this service elsewhere. Governor Beebe has formed a state
taskforce to examine our needs as a state, and I am a member of
that taskforce.
In rural Arkansas, the 2009 Recovery Act is funding broadband
upgrades to about 13,000 of our customers, but thousands more
continue to wait year after year for broadband. The FCCs new
Connect America Fund is a work in progress but should help. Fortunately, CAF will begin investing in Arkansas in 2013. Both you
and Commissioner Rosenworcel deserve great credit for accelerating the effort. Thank you for that.
Today, as a part of CAF, Windstream is announcing plans for
substantial rural investments, and this includes a significant incremental investment in this state.
Windstream also serves small, medium, and large businesses in
urban markets. In Little Rock, for instance, Windstream connects
some of the largest medical facilities. Last year, we opened a stateof-the-art data center in west Little Rock.
Especially for competitive providers, it is vital that Congress and
the FCC proceed with care in remaking regulatory structures for
the IP era. Some have called for a sweeping rollback of the powers
of the FCC, but telecom is complex. There are risks of competitive
harm. Unbalanced regulatory treatment among competing platforms may disincent investment. Reforms must be judicious and
fact-based.
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Thank you, Mr. Chairman, for convening todays dialogue. We all
need a practical understanding of the states communication needs
and challenges. Thank you.
[The prepared statement of Mr. Gardner follows:]
PREPARED STATEMENT OF JEFF R. GARDNER, PRESIDENT AND CHIEF EXECUTIVE
OFFICER, WINDSTREAM CORPORATION
Chairman Pryor: Thank you for your leadership on communications policy and for
inviting me to testify today.
Windstream traces its roots back to Sheridan, Arkansas, where our predecessor
began as the local phone company in 1948. This year, Windstream is proud to have
joined the FORTUNE 500, and we are still proud to call Little Rock our headquarters.
Windstream unites rural and urban America with an innovative business model:
RuralWe provide universal, carrier-of-last-resort service to some of the most
remote areas in the nation, including many in Arkansas. About 90 percent of
Windstreams exchanges are smaller than Sheridan. Although we have vigorous
competition from wireless and cable companies in the rural towns, we also
reach many locations that those providers consider too remote and too costly to
address.
UrbanIn urban markets like Little Rock, we are a competitive carrier, going
head to head with the largest incumbent phone companies, as well as incumbent cable companies. Windstream caters to businesses large and small, offering
a personalized approach to management of every aspect of communications infrastructure.
National networkLinking these diverse customer groups is the Windstream
network and associated infrastructure, including more than 20 data centers
that support cloud-based storage and services. Our network includes 115,000
miles of fiber-optic cableenough to circle the Earth 412 times.
Mr. Chairman, let me provide a few examples of how we serve your constituents
and how those services could be affected by your work leading this subcommittee.
Connecting Schools and Universities
Educational institutions are significant and valued Windstream customers.
Windstream serves a wide range of campuses, from small Arkansas districts with
a few hundred students to Ivy League institutions.
In particular, one of Windstreams longstanding customers is the Mooresville
Graded School System in North Carolina, which is considered a national leader in
using high-speed broadband and wireless devices to overhaul its pedagogical approach and drive significant gains in student achievement. Windstream data connections have helped make these achievements possible, as we provide 1 Gigabit connections to each of Mooresvilles lower schools and a 5 Gigabit connection to its high
school. Although Mooresvilles achievements are widely known in educational circles, the district gained additional acclaim this summer when it hosted a visit by
President Obama. At Mooresville Middle School, the president announced ConnectEd, his plan to expand the E-Rate program to enable more schools to follow in
Mooresvilles footsteps.
Closer to home, Windstream provides 100 Megabit speeds to each of the 24 elementary schools in the North Little Rock district and 1 Gigabit speeds to the districts two high schools. As in the case of Mooresville, this service is funded in part
through the FCCs E-Rate program.
Earlier this summer, I accepted an appointment by Governor Beebe to the FASTER Arkansas Task Force, which is studying broadband access in public schools and
developing recommendations on areas for improvement. In my view, a critical
threshold question is, why are some districts not moving up to higher-speed services? Based on Windstreams experience serving schools and businesses, very advanced offerings are deployed, even in smaller communities, and are in use by
many. To the extent that educational entities do not use these services, we need to
explore the cause: Is it lack of availability of facilities, lack of funding, or another
reason like lack of computers or tablets in the schools, teacher training, or curriculum support?
Clearly, there is strong interest in Arkansas and at the national level in capitalizing on recent technological advances. Some have said there are opportunities for
new types of educational materials; for broader dissemination of educational devices,
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from smart boards to computers; for more self-paced learning; and more effective assessment and targeted intervention by instructors. Windstream supports these goals
and objectives and would like to be a partner in developing a vision for this increasingly digital future, whether thats through state efforts or reforms to the FCCs existing E-Rate program.
Connecting Rural America
As you know, Windstream is one of the three largest providers of phone and
broadband service to rural Arkansas. In this capacity, I have seen firsthand how
engaged and effective you have been in improving the states rural communications.
Windstream is in the closing stages of an investment program funded jointly with
the U.S. Department of Agriculture to upgrade broadband for about 13,000 rural Arkansans. In addition, Windstream contracted with the University of Arkansas to
provide broadband links to more than 200 rural health sites. These both were significant projects for the state and both were made possible by the 2009 Recovery
and Reinvestment Act, also known as the stimulus bill. Thank you for the important
role you played in these success stories.
As we think about the challenges that lie ahead for rural Arkansas, two basic
facts remain as true today as they were 20 years ago:
(1) Wireline networks are essential for all communications.
(2) The economics of rural communications are challenging.
I spent much of my career in the wireless industry and am as fascinated as anyone by the amazing changes that we have seen. But policy makers must not lose
sight of the fact that all robust communications still come down to electrons or light
moving along a wire. Wireless towers and antennas connect back to a terrestrial
network. In fact, in Arkansas, as wireless carriers have upgraded to next-generation
4G services, they have come to Windstream for network connections. In the last two
years, Windstream has constructed fiber backhaul facilities for 380 wireless towers
in the state.
In addition, for all wireless networks and technologies, one of the most important
traffic management tools is offloading traffic onto landline networks as quickly as
possible. Often, this means handing off traffic to Wi-Fi networks supported by
wireline providers. One recent analysis found that Wi-Fi already handles more than
two-thirds of the data for LTE subscribers and that its share is expanding. When
consumers use tablets and smart phones at home, at a hotel, or in a shop, chances
are they are connecting through a wired Wi-Fi connection.
And, of course, many rural consumers live in places where wireless service is not
so prevalent or reliable. The wired networkincreasingly via broadbandremains
the sole tether for rural residents to stay in touch with family, friends, and business
interests around the state, country, and world.
In rural Arkansas, a modern and reliable wireline network continues to serve an
important role comparable to good roads and bridges.
But the economic challenges of serving rural America are as old as the telephone
itself. The basic question is, how can we deploy, operate, and maintain expensive
assets in areas with low population density? As a general principle, network costs
are lower per subscriber in more densely populated areas but higher in rural areas,
while total revenue potential in an area decreases with lower density. Thats why
we have universal service programs and intercarrier compensation systems.
Todays hearing is timely, because the FCC is in the process of dramatically reshaping the financial underpinnings of universal rural networks. This transition
must succeed, because the stakes are very high for rural America, including much
of Arkansas, but many details remain unresolved.
USF/ICC reform has become shorthand for a top-to-bottom overhaul of rural
communications programs, starting with the Universal Service Fund itself, and also
including the Federal and state components of intercarrier compensation, as well as
state USF programs. The FCCs reform order in 2011 mandated specific and sizable
reductions in intercarrier compensation and proposed a fundamental overhaul of
universal service for high-cost areas. Apparent even at a high level, the math here
is simple and challenging. On one side of the ledger, intercarrier compensation has
been slashed by billions of dollars, while Federal universal service funding remains
at roughly the same level as before. On the other side of the ledger, the FCCs goals
now are to sustain ubiquitous voice service while also, simultaneously, substantially
increasing broadband access in rural America.
We understand the need for reformin fact we pushed for it and helped get the
comprehensive reform order across the finish line in 2011but the job is far from
complete.
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This spring, the FCC decided to invest $485 million in rural broadband expansion
via Phase 1 of the Connect America Fund. You played an important role in that decision, Mr. Chairman, and I thank you. Pursuant to commitments made while the
FCC was considering the rules for this round of Phase I funding, Windstream will
matchon at least a dollar-for-dollar basisthe total amount of Phase I funding it
receives. As a result, this coupling of public and private investment dollars will enable us to enhance broadband or deliver it for the first time to hundreds of thousands of consumers in Windstreams territory.
Still, unresolved aspects of reform, coupled with slashing of intercarrier compensation, have created troublesome uncertainty for price cap carriers and the
consumers they serve. For the future, there are plans to estimate the price cap carriers costs of providing service to certain rural areas, then offer funding above a
high cost threshold, along with a set of performance requirements, to serve the area.
There has been an unspoken assumption that the proffered funding will be reasonable to the provider, but also attractive to policymakers who are trying to cover the
Nation with ubiquitous voice and broadband on a constrained budget. We are hopeful that these dual objectives soon will be fulfilled, and that the strain from existing
uncertainty will be lessened. But we need the FCC to continue in a transparent and
deliberate fashion as it moves forward with the next phase of reform, and ask the
Committee to keep a watchful eye in its oversight role.
Connecting Urban America
Just as in rural markets, urban communications ultimately ride along a wireline
network. In 2012, wireline networks moved 99 percent of all video traffic. The most
recent data for 2013 suggests that Wi-Fi, a technology tied to landline networks, is
carrying four times the data load of cellular.
Windstreams focus in urban markets is on business customers, and we serve
more than 450,000 businesses, including most in the FORTUNE 500. In Little Rock,
for instance, Windstream serves some of the largest medical facilities. In the hospitality industry, Windstream ranks as one of the largest communications technology
providers nationwide, supporting more than 1 million rooms. Windstream also
serves major government entities, prominent universities, and leading financial institutions. Of course, we serve many small and medium-sized businesses and locations too.
In the past year, Windstream has seen particularly strong growth in demand for
off-site data storage and related services. For example, a financial institution in
Charlotte may want to back up its data at Windstreams Little Rock data center
to ensure 24/7 access and safety in the event of an unforeseen disruption to its operations in North Carolina. Windstream now operates more than 20 data centers,
from Boston to Phoenix and from Chicago to Little Rock. Each has state-of-the-art
electrical systems, secure entry, and a range of services, from cloud computing to
disaster recovery.
In your role as chairman, I would ask that the subcommittee pay close attention
to sustaining competition in urban markets.
There has been considerable discussion in Washington about the vigorous rivalry
among firms that seek to serve residential customers. For phone and Internet service, most homes can choose at least between a legacy phone company and a legacy
cable company. Wireless and satellite providers also are competitive for a narrower
set of services. As a result, only about one home in four now receives voice service
from a traditional landline phone company.
Yet alternate infrastructureand the range of competitorsis narrower for businesses that need sophisticated, high-capacity communications. The majority of buildings across the country continue to be served only by a connection from a Bell Operating Company.
In 1996, a Republican Congress and a Democratic president agreed to a landmark
law that reduced regulation of telecommunications in exchange for specific strategies to promote market competition. The provisions of the 1996 Telecommunications
Act allow Windstream to compete even in markets where a Bell company still has
a lock on critical infrastructure.
Citing the advancement of IP technologies and competition in residential markets,
some have called for a sweeping rollback of the powers of the Federal Communications Commission. But few players in industry believe that fact-based policy reformsespecially when business customers are consideredwill come so easily or
conform neatly with partisan political philosophies.
Like Windstream, most companies are deploying IP in their networks and appreciate the importance of this conversation, which is enhanced by the creation of an
FCC task force on the issue. This transition, however, is a process, and will unfold
in different ways and at different times for each provider.
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Increasingly, there is no one size fits all approach. As you know, Windstream
operates as an ILEC in some areas, in others as a CLECindeed, as one of the Nations largest and most successful CLECs. So when it comes to issues such as interconnection, competitive access, transport, privacy, and public safety, we are keenly
aware of the need for public policy to balance regulatory treatment among competing platforms; to avoid disincenting wireline investment; and, at the same time,
to avoid competitive harm, especially during this transition period that we are in,
a transition that is technology-driven.
I suggest that the subcommittee seek out specifics regarding changes in the communications market, and that it take care when considering policy reforms in response. In areas where the competitive or economic dynamics are not fully understood or where there are gaps in our knowledge, we will need to gather and analyze
the right data to understand the specifics of the situation. In particular, we need
to be wary of using competition in residential markets as a reason to withdraw regulatory rights and obligations that enable competition in business markets. Modernizing our regulatory structure and planning for a smooth transition to an IP world
are essential to the health of the wireline industry and all the benefits that it brings
our Nation. It is critical that reforms be judicious and founded on fact-based assessment of the modern communications marketplace.
The State of Communications on the Ground
Mr. Chairman, I congratulate you on convening todays dialogue. It is important
that the oversight and legislative efforts of the Senate Commerce Committee be
grounded in a practical understanding of the challenges that lie ahead for Arkansas
consumers and companies. All providers in rural areas have been placed under financial strain by the end of intercarrier compensation and the overhaul of universal
service. This situation merits a watchful approach by your subcommittee. In addition, consequences of moving to the IP era may be enormous. I would urge you to
cast a wary glance on policy reform proposals, in response, that sound simple and
easyas the transition to an all IP world is complicated and entails different consequences for different types of customers. Continued competition across the communications landscape will require reforms targeted to varying conditions.
Again, thank you for the invitation to appear today and to testify.
Senator PRYOR. Mr. Drilling?

STATEMENT OF EDWARD DRILLING, PRESIDENT,
AT&T ARKANSAS
Mr. DRILLING. Thank you, Mr. Chairman. Appreciate the opportunity to be here with you today and with the Commissioner as
well. Thank you for being here.
Certainly, access to broadband technologies has fundamentally
changed societythe way we live, the way we work, the way we
connect. At AT&T, we have had to fundamentally change the way
we build and manage our network to keep up and stay ahead of
this demand.
You know, I can relate a story here about Arkansas, Senator,
where in 2000, when I first came in the job as president of AT&TArkansas, we had over a million access lines, 1.33 million, actually,
access lines in Arkansas. And as of July of this year, that number
is now 361,000 access lines, so that is a drop of 65 percent of our
access lines over that period of time.
And if somebody would have told me that in 2000, I would have
been concerned that I would have either been fired by now or our
company would be broke or both. But, obviously, we have had to
make an extreme pivot in the way we manage and build our networks.
That decrease is even more significant when you look at just the
consumer access lines, which have dropped 75 percent. So, as of
July, when you overlay the increase in the living units that we
have in our traditional landline footprint, about 17 percent of the
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living units that are in our footprint have landline telephone service.
So we see a high penetration of wireless in Arkansas. Over 50
percent of our customers have wireless only. A large number have
gone to cable and VoIP. A very competitive marketplace out there.
But we have pivoted and we have invested heavily in Arkansas.
Just in the last 4 years alone, through July, we have invested over
$840 million, $90 million of that just in the last 6 months of this
year. We have invested heavily in LTE wireless technology. By
mid-2014, we will see all of our towers LTE-equipped and providing
wireless broadband across the state and increasing the number of
sites that we have in rural areas as well. We also have invested
heavily in U-verse and other IP technologies across the state.
So what this means also is that are taking fiber deeper and deeper into our network, deeper into rural areas where we can more
cost-effectively serve small businesses, healthcare institutions, educational institutions around the state as well. Of course, it requires
more bandwidth and it requires more spectrum from a wireless
perspective as well.
I think the challenge that we have going forwardbecause we
know what we have seen in the last 6 years, and we know what
is going to happen going forward in the next 6 years is going to
be even more dramatic and require even more bandwidth. But we
also have the legacy network that we continue to have to invest in
and keep up with, even though we are losing customers on that
network in droves.
So the commissioner mentioned the IP transition a few minutes
ago in her remarks, and we sure look forward to working with you
and the commission on this transition as we go forward over the
next several years.
Thank you.
[The prepared statement of Mr. Drilling follows:]
PREPARED STATEMENT
OF
EDWARD DRILLING, PRESIDENT, AT&T ARKANSAS
Thank you, Senator Pryor, for inviting AT&T to join in todays discussion.
Access to broadband technologies has fundamentally changed society and the way
we live, work and connect. It has helped drive innovation in the marketplace, open
new markets, expand economic growth, connect us to family and friends, strengthen
communities, serve as a tool for learning, and provide news and information. Highspeed broadband access in rural areas delivers advanced broadband technologies,
applications and services that fuel advancements and create efficiencies in areas
such as farming, ranching, health care and education. And, thanks to amazing
breakthroughs in wireless technology and increased deployment of next-generation
mobile broadband4G LTEall these benefits can now travel with us.
Even as more Arkansans benefit from broadband deployment and access to the
Internet, we have only just begun to reap the amazing rewards of high-speed
broadband across this great nation. Theres more to come: better, faster, and more
reliable service and the development of even more applications and services.
Our effort to modernize and upgrade our antiquated 20th Century telephone networks and expand our mobile broadband network is aimed at meeting the demands
of consumers who have embraced these new technologies and demand the next-generation of services and applications that high-speed Internet networks provide.
AT&T is committed to investing in Arkansas future. In fact, during the past four
years AT&T invested $840 million in Arkansas, $90 million of that occurred in the
first half of this year alone. We continue to build out and deliver these state-of-the
art, cutting-edge broadband technologies to Arkansas consumers. And we are not
slowing down.
AT&T has increased our deployment of U-Verse and 4G LTE across the state. Our
plan is by the middle of 2014, our fastest and most reliable 4G LTE network will
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be operational on the majority of our towers in Arkansas. We are increasing our deployment of fiber networks to more facilities and buildings around the state. And
we are deploying fiber to more rural and hard-to-reach areas, particularly to more
cell sites. What does this fiber build mean? It means that as we build out more fiber
to more cell sites, and as we continue to increase our number of cell sites, we create
a denser grid. This denser grid is capable of unlocking the full potential of the Internet and carrying the data-intensive traffic of these leading edge high-speed
broadband applications and services that are serving and bringing substantial benefits to Arkansas farmers and healthcare specialists. It also means the availability
of more fiber to all areas of the state, that would decrease the costs of providing
faster broadband service to schools and businesses.
Yet, AT&T, as an incumbent telephone company, faces difficult circumstances and
a growing challenge to maintain these significant infrastructure investments in Arkansas. AT&T is no longer a monopoly telephone service provider. We provide
broadband and communications services in a robustly competitive marketplace
where consumers have many choices among various providers of networks, services
and devices. Consumers and businesses have and continue to abandon the plain old
telephone network in droves for broadband and mobile services offered by those alternative providers. For example, they are increasingly choosing wireless over traditional home phone service, as now approximately 50 percent of households statewide
subscribe to wireless only service.
At the turn of this century, AT&T had nearly 1,033,382 residential and business
telephone access lines delivering service in Arkansas. Today, the number of access
lines we serve in the state has fallen dramatically. At the end of 2012, the number
of access lines we served dropped to 414,020 linesthe equivalent of a 60 percent
reduction in just twelve years. In fact, these double-digit access line losses happened
while the number of households and businesses increased in the state during the
past decade. The shift away from the legacy telephone network is happening so fast
that by the end of this year we estimate that less than 24 percent of Arkansas
households will have service from AT&T. But, while we thus continue to lose
wireline subscribers (and the revenues from serving those subscribers) at a rapid
pace, we retain all the costs of maintaining our legacy wireline network to meet our
regulatory obligation to provide service on demand to anyone that wants it. One
does not need a Ph.D. in economics to understand that this business model is no
longer sustainable.
This disappearing customer base means that incumbent telephone companies, like
AT&T, must be provided a path that enables the retirement of antiquated telephone
networks, and creates the right incentives to justify and bolster expanded investment by incumbents (and, indeed competing service providers) in next-generation
high-speed Internet networks.
What does this mean for our Arkansas customers? It means creating an environment for AT&T and other incumbent telephone companies that accelerates the modernization and upgrade towards high-speed broadband networks. It means bringing
access to the services and applications brought by high-speed broadband Internet
to allow farmers and ranchers to engage in a more globally competitive market and
create greater efficiencies for food growth, reduction in fuel consumption, livestock
monitoring and irrigation management. It means building more fiber to cell sites,
and bringing fiber closer to elementary, middle and high schoolsso that this service capacity can be used to deliver the incredible benefits of high-speed Internet to
empower Arkansas students learning potential and fuel the imaginations of our
next generation.
And it means bringing a modern broadband network closer to Arkansas to create
opportunities for telemedicine consultations, in which specialized medical professionals from urban areas can diagnose, treat and provide long-term monitoring capabilities not previously available to rural residents and Arkansas senior citizens.
How can policymakers provide additional regulatory and business certainty to
help speed the investment necessary to meet rising consumer demand for 21st Century broadband services? The FCC can take the first step, and act quickly on
AT&Ts request to begin a collaborative process with industry, public interest
groups, and consumers to implement trials in a few local markets to create a realworld test of the transition away from the antiquated legacy telephone network and
towards the deployment of networks capable of offering voice, video and high-speed
Internet services. The trials will provide an opportunity for all stakeholders (including consumers, industry and policy makers) to identify and engage in an informed
debate about any gaps in technology, services or policy, and to develop solutions
that address parties concerns. In some cases, the solution may entail changes to
proposed replacement services to ensure that they will support essential features
and functions following the transition. In others, stakeholders may conclude that
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particular features and functions no longer are necessary or make sense in an allIP world, or that entities that historically relied on TDM technology and services
will have to adapt their own products and services to be compatible with next generation wireless and IP-based services. The important thing now is to commence
those trials now so that we, as a nation, can begin to identify and resolve the issues
(both known and unknown) that will arise as we complete the transition to next
generation wireless and IP-based services while a TDM safety net is still in place
so that an orderly transition can occur, along with the proper planning to make that
happen.
As part of this process, the FCC must take a hard look at regulations that were
written for a different technological and market landscape. Properly implemented,
local market trials can play a key role in helping create a pro-consumer, 21st century regulatory framework that encourages innovation, facilitates significant and
sustained investment, meets consumer demand for high-speed Internet service, and
ensures that no consumer is left behind. Thank again for inviting me to speak on
these important matters.

Mr. Strode?
STATEMENT OF JOHN STRODE, VICE PRESIDENT OF
EXTERNAL AFFAIRS, RITTER COMMUNICATIONS HOLDINGS,
INC. ON BEHALF OF RITTER COMMUNICATIONS HOLDINGS,
INC., NTCATHE RURAL BROADBAND ASSOCIATION, AND
THE AMERICAN CABLE ASSOCIATION
Mr. STRODE. Thank you, Mr. Chairman, for the opportunity to

testify today.
Companies such as Ritter Communications and its subsidiaries
are state-of-the-art broadband companies providing for our customers varied data, video, and voice needs. We connect the state,
the nation, and the world by holding the responsibilities of consumer protection, public safety, equitable competition, and universal service in the highest regard.
Despite our contributions, rural telecommunications companies
face greater challenges than ever as the mechanisms for ensuring
high-cost areas stay connected are called into question.
Many in the rural telecom industry continue to struggle with the
FCCs Universal Service Fund and intercarrier compensation transformation order. The orders cuts, together with the threat of more
to come, inject substantial regulatory uncertainty into the operations of our companies. In fact, even companies that are not affected by the cuts at this point are deciding against network upgrades for fear of becoming the next to be capped.
Thanks to your efforts and those of your colleagues, there has
been some incremental progress toward eliminating the uncertainty and building a broadband future through more sensible
modifications to the relevant programs. But this work isnt done,
and we need a targeted Connect America Fund for small carriers
that supports access to sustainable, affordable broadband.
This is part of a larger debate about technology transitions in the
telecom sector. We need a thoughtful evaluation of whether existing rules should be modified or eliminated as technologies evolve.
However, it must not disregard key public policy cornerstones, including universal service and consumer protection.
The epidemic of rural call-completion failures provides the best
early indication of what can happen without sensible rules of the
road to ensure core public policy goals are served.
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Likewise, as our Nation undertakes new initiatives like FirstNet
and modernizing the E-Rate program, it is important to be
thoughtful in structuring and developing such programs. We should
be leveraging existing networks and coordinating such initiatives
with other programs like the High-Cost USF to avoid wasting valuable resources and program dollars.
Finally, we hope policymakers will update the rules governing
the video and wireless marketplaces to ensure consumers are
served and fair competition is enabled. In particular, the broken retransmission consent market, exemplified by the current CBS-Time
Warner dispute, is governed by outdated rules that no longer reflect todays marketplace.
We are aware that the Senate Commerce Committee must renew
the Satellite Television Extension and Localism Act by the end of
2014. As chairman of the relevant subcommittee, we hope you will
keep an open mind regarding whether modernizing retransmission
consent rules should be considered as part of that bills reauthorization.
In closing, adopting and updating sensible rules of the road that
create regulatory certainty and help build a broadband future for
rural Arkansas will be essential to the success of our customers
and our companies. We look forward to working with you.
[The prepared statement of Mr. Strode follows:]
PREPARED STATEMENT OF JOHN STRODE, VICE PRESIDENT OF EXTERNAL AFFAIRS,
RITTER COMMUNICATIONS HOLDINGS, INC. ON BEHALF OF RITTER COMMUNICATIONS
HOLDINGS, INC., NTCATHE RURAL BROADBAND ASSOCIATION, AND THE
AMERICAN CABLE ASSOCIATION
Mr. Chairman, thank you for the opportunity to provide the perspective of Ritter
Communications and the nearly 900 similarly situated small rural communications
providers from around the Nation that are represented by NTCAThe Rural
Broadband Association and about 850 small cable providers represented by the
American Cable Association.
Companies such as Ritter have been, and remain, essential to ensure that we are
an interconnected nation. We serve the Nations highest cost rural areas where others would not. We hold the responsibilities of consumer protection, public safety, equitable competition and universal service in the highest regard. Today most of us
are anything but plain old telephone companies, offering state-of-the-art broadband
services capable of providing for our customers varied data, video, and voice needs.
Many, such as Ritter, are also involved in other lines of business such as video services and transport and wholesale Internet services to sustain ourselves and our communities in a challenging era of economic and technological transition.
Rural telcos are responsible for sustaining 70,700 jobs nationwide directly or indirectly. They contribute nearly $15 billion to the economies of the states in which
they operate. But here is the really interesting factnearly two thirds of this economic activity, almost $10 billion, benefits urban areas. This underscores the
valuethe paybackof an interconnected nation, and shows how a mix of entrepreneurial can-do spirit and reasonable public policies contribute to the greater wellbeing of our nation.
For all of these successes in the face of great challenges, rural telecom today faces
perhaps greater challenges than ever. Technologys endless rapid evolution repeatedly forces all of us to adapt quickly. Globalization routinely introduces new twists
to be acknowledged and understood. Customer allegiance is no longer a given even
when superior performance is delivered. And, perhaps most importantly, our Nations commitment to universal servicewhich is embodied in Federal lawis called
into question as changes to policies (and the threat of more to come) make it harder
for companies to plan to carry out that mission.
The low-density, high-cost areas that are served by Ritter and its rural industry
colleagues represent special places. They contribute to our Nations well-being
through activities like food production, supply of natural resources, and a home for
outdoor activities and enthusiasts from across the country and the world. But they
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are also special in that they are not easy markets to serve, and policies and experiments that might work in more densely populated areas can undermine critical connections in these areas if not fully thought through in advance and carefully calibrated.
IP Evolution and the Need for Rules of the Road
A case in point comes in the raging debate surrounding the telecommunications
industrys Time-Division Multiplexing (TDM) to Internet Protocol (IP) transition.
Many suggest that if they were merely relieved of todays regulatory shackles they
would quickly begin to more actively participate in this evolution. Others appear focused on maintaining the status quo and old rules regardless of changes in technology, consumer preference, or competition. By contrast, our position is that this
technological transformation is already well underway independent of the existing
regulatory framework or any potential regulatory changes. But at the same time,
we believe there is a need for a thoughtful evaluation of whether existing rules
should be modified or eliminated as technologies evolve. It is important, however,
that this evaluation always hearken back to key public policy cornerstones of universal service, consumer protection, and equitable competition. Particularly in fragile rural markets, once again, discarding proven rules of the road that helped to
provide certainty and justify investments on the mere basis that network technologies have evolved would be ill-advised and could lead to serious harm for consumers.
Indeed, the epidemic of call completion failures that currently plagues our Nation
provides perhaps the best early indicator of what happens when technological or
competitive changes are used to justify avoiding basic rules of the road that keep
customers connected. Multiple surveys conducted by NTCAThe Rural Broadband
Association and others have revealed that, despite statutory and regulatory mandates designed to ensure telephone calls are successfully completed, consumers in
rural markets continue to find themselves cut off from calls from other areas. While
there are rules on the books that should preclude such behavior, some have taken
the view that they are not responsible for self-declared unregulated providers in
the middle of such calls, and the lack of clarity surrounding what rules may govern
these self-declared unregulated providers has only made it harder to get to the
root of the problem. In the meantime, rural America suffers.
For this reason, I would like to acknowledge your co-sponsorship of Senate Resolution 157 which recognizes the public safety, economic, and national security implications of this situation and calls upon the FCC to take every possible step to satisfactorily resolve the issue. This resolution provides an example of how common-sense
oversight is essential to address market failures, and shows the chaos that can
ensue in the absence of a lack of clear rules of the road. Thank you also for your
role in ensuring this bill was recently marked up by the full committee. We look
forward to its approval by the full Senate as soon as possible.
Universal Service in High-Cost Areas
Of course, universal service policy remains a linchpin of helping to ensure highcost areas can stay connected to the rest of America and the worldand another
example of how uncertainty can undermine the ability to serve rural areas.
Many in the rural telecom industry continue to struggle with the aftermath of the
FCCs Universal Service Fund (USF) and Intercarrier Compensation (ICC) Transformation Order. In that order, the FCCs reforms for smaller companies like Ritter
largely consisted to cuts, caps and constraints to existing USF mechanisms and an
ultimate destination of zero for ICC revenues that we can receive from the larger
companies that use rural networks.
Our companies and the associations that represent us visit with the FCC and congressional offices frequently to see if improvements can be made to the new USF
caps. The most significant concern is that some of these caps have injected substantial regulatory uncertainty into rural telecom investment, to the point where even
companies that are not affected by the caps today are deciding against network upgrades simply for fear of becoming the next to be capped. In fact, NTCA conducted
a study earlier this year that found nearly 7 in 10 small rural companies had postponed or cancelled broadband investments precisely because of uncertainty arising
out of the FCC reforms.
Exacerbating this overhang of regulatory uncertainty, the FCC is considering imposing additional cuts, caps, and constraints atop those already adopted. At a time
when everyone is still implementing the cuts already made and evaluating the effects of those on consumers and broadband investment, it seems rash to plow forward with yet more changes that would reduce USF support and ICC revenues for
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responsible companies like Ritter. Yet that is precisely what the FCC is considering
in the form of a Further Notice of Proposed Rulemaking.
Thanks to your efforts and the efforts of many of your colleagues, we are seeing
incremental progress in the effort to create regulatory certainty and build a
broadband future through more sensible changes and updates to the USF and ICC
mechanisms. The FCC has adopted phase-ins to the caps as a result of congressional attention and industry pressure, and we have also seen the Government Accountability Office commit to Congress that it will undertake an evaluation of the
effects of the USF and ICC reforms on key issues like consumer rates and
broadband deployment. But real long-term fixes to the caps and the creation of regulatory certainty for network investments that can only be recovered over several
decades still seems many steps away. In short, we still have a ways to go to create
regulatory certaintyand your continuing help will be essential in that effort.
Even as we need to obtain some greater degree of regulatory certainty to facilitate
investment and lending in the rural telecom space, there is just as great a need to
do what hasnt yet been donereposition USF for smaller carriers to accommodate
an IP-enabled, broadband-capable world. Today, when a small carrier of last resort
like Ritter sells voice telephone service, we get some USF support to ensure that
service is affordable for the consumer. But if the same consumer decides later that
he or she only wants to take broadband and drop voice telephone servicea natural
part of the IP evolutionsmall carriers lose USF support on that line, meaning
that the rates often quickly become unaffordable. We still need a targeted Connect
America Fund that provides sufficient and predictable support for smaller carriers
like Ritter and facilitates giving consumers the services they want rather than compelling them to take legacy services to get affordable rates. Resolving this issue in
short order must be seen as both critical to the FCCs IP Evolution agenda and the
success of its USF policies.
Other Universal Service Concerns
Even as it has taken some steps to modify USF distribution rules, the FCC has
yet to tackle in any meaningful way the question of USF contribution reform. Just
as in the past, when those benefiting the most from a nationwide integrated voice
network contributed to the USF to help sustain that network, in todays broadband
era, so too must broadband network operators, all kinds of VoIP providers, and
Web-based enterprises contribute to a funding mechanism that ensures the availability and affordability of broadband-capable networks nationwide. Expanding the
base of USF contributors will ease pressure on the fund as well as all of its contributors, and ensure that the USF program can effectively help promote the universal
availability and adoption of advanced communications services.
Ultimately, it is important to size the USF for the jobs that need to be done.
The fact is that the high-cost fund, even as it was placed on a budget in 2011,
had not been growing materially for years once controls were placed on wireless
identical support. Yet there is much more to do in high-cost areas, with the National
Broadband Plan identifying a broadband availability gap that stimulus programs
and existing high-cost support levels could only hope to dent. And even beyond making service available in the first place, there is the need to keep that service affordable and of reasonable quality over time (so consumers can actually make use of
it). Even in a capped fund, for example, the reality is that labor costs associated
with deploying and upgrading networks increase over time, and as with certain portions of the USF, there should be some recognition that inflationary adjustments at
the very least are needed within any USF budget.
One area of the USF that is attracting significant attention right now is the USF
Schools and Libraries (E-Rate) program. As a result of the administrations emerging ConnectEd initiative and the FCCs push to modernize the program, the ERate program will be a key focus of universal service policy for the rest of this year.
Rural providers recognize the important of E-Rate as part of a comprehensive
USF program. Smaller carriers, facing the challenges of distance, were early adopters of distance learning concepts and technology and the communities they serve
have benefitted from their focus and this program. Yet, as with any other potential
USF reforms, these issues are too important to gamble on through experiments or
sound-bite driven reforms. In particular, we believe it is essential to coordinate any
E-Rate reforms with other portions of the broader USF umbrella so that any expansion of E-Rate, to the extent policymakers deem it appropriate, does not come at
the expense of other important programs like the already-budgeted high-cost fund.
Similarly, the current national focus on First-Net is also one that presents both
opportunities and challenges for the rural telecom industry. Certainly we should be
doing everything possible to ensure the development of a robust nation-wide mobile
first-responders communications network. But again, we must guard against waste-
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ful duplication. Especially, given the need to ensure FirstNet dollars go as far as
possible in covering various jurisdictions, FirstNet must give all due consideration
to leveraging existing infrastructure where possible.
Other Key Competitiveness Issues
The success of the FirstNet initiative of course depends in significant part upon
auctions of spectrum that will facilitate and finance network deployment. It will be
particularly difficult to set a stage that ensures widespread carrier participation in
such auctions, but we must live up to this challenge.
To meet this challenge, the 600 Mega Hertz block of spectrum that is the subject
of the auctions should be licensed according to Cellular Market Areas (CMAs). A
CMA-based licensing structure will best ensure that a variety of providers, large
and small, are able to effectively participate in the auction. This will also provide
the best chance of ensuring that rural areas see meaningful deployment of this valuable spectrum, rather than being an afterthought in a larger providers deployment.
Finally, we must build upon the lessons learned from the 700 Mega Hertz deployments and ensure the FCC adopts fair data roaming and interoperability provisions
in conjunction with the distribution of this spectrum.
Much like wireless services, video products could be a promising way for smaller
companies to diversify their offerings, be more responsive to consumer needs, and
stimulate broadband adoption. But todays small rural multichannel video programming distributors (MVPDs) face an array of obstacles arising from outdated, decades-old rules that do not reflect the programming markets of today.
This has been a troubling issue for small rural providers for years, but it has become a major problem for the entire MVPD industry of late. Perhaps the most notable (or notorious) example right now comes in the recent negotiations between CBS
and Time Warner Cable, Inc. As a result of market failures in those negotiations
and a lack once again of clear rules of the road that put consumers first, Time
Warner Cable and Bright House Network customers do not have access to local CBS
broadcast programming. Equally alarming is that CBS has also limited access to its
online content by Time Warner Cable and Bright House broadband customers. CBS
Internet blackout even affects these cable operators broadband customers who receive their television service from other service providers, like DirecTV or DISH,
and customers who get their television over-the-air.
Examples such as these underscore the problems with the retransmission market,
with negotiations often leading instead to take it or leave it choices, particularly
with regard to smaller operators, and brinksmanship over rapidly escalating and
unaffordable feesand, in more and more cases, leading to programming blackouts.
Whether viewed individually or as a whole, these tactics are anticompetitive, inflate consumer costs and lead to market failure. Congress and the FCC must act
to fix the old laws that govern access to content and programming to reflect todays
video marketplace.
Ritter Communications and nearly all other pay television providers in Arkansas
and around the country are well aware that renewing the 2010 Satellite Television
Extension and Localism Act (STELA) is one of the things that your committee must
accomplish before the end of next year. Notwithstanding the rising number of retransmission consent disputes, and their impact on consumers, some lawmakers
have already concluded, and stated publicly, that they want a clean reauthorization of this bill-that is, do nothing more than change a few dates in the existing
law. Many in the industry have interpreted lawmakers who make such a declaration
as taking a position that they will not address any other issues related to the pay
television industry, regardless of the merit, need or circumstances. As Chairman of
the Commerce, Science and Transportation Subcommittee on Communications,
Technology and the Internet, we hope you would keep an open mind regarding the
issues that should be considered as part of the STELA reauthorization, which is the
most germane bill that will pass out of your committee in the foreseeable future.
Additional Challenges Faced by Small Businesses
Our diverse industry is confronting other, less obvious challenges as well. Increasingly, small rural communications providers have become targets of patent infringement claims levied by patent assertion entities (PAEs). Typically these PAEs purchase already existing patents merely for the purpose of enforcing them for financial
gain, with the knowledge that small businesses often lack the resources to investigate and defend against such claims. PAEs are targeting the users or purchasers
of the patented technologies rather than their manufacturers or creators, and PAEs
also seem to focus on patents tied to established technologies and processes upon
which small businesses rely.
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Many in Congress and the administration alike are concerned about the effects
of PAEs on innovation and technology deployment. The President has gone so far
as to note concerns about parties that fail to actually produce or invent anything
and yet look for a payout. The small rural communications sector urges the Administration and Congress to work together to identify solutions that will protect unwitting small businesses from this spurious practice.
Cybersecurity and privacy have also consumed the attention of policymakers and
the public alike over the course of recent months. Secure critical infrastructure is
crucial to Americas national and economic security. Yet care must be taken to ensure our response to these threats does not create new unfunded mandates on small
businesses, such as community-based carriers operating in rural areas.
We were pleased to see that the leadership of the Senate Commerce, Science and
Transportation Committee recently introduced an updated cyber security package
that more closely aligns with a voluntary industry approach advocated by the proposals put forth by the House of Representatives and the Presidents recent executive actions.
Rural providers take cybersecurity responsibilities seriously, and have been deploying cyber defenses tailored to the needs and vulnerabilities of their networks.
NTCA has been providing training to members and serving on the Communications
Sector Coordinating Council which facilitates the exchange of information on this
subject.
We believe that we can best achieve the twin aims of developing secure networks
and robust economic growth by encouraging government and industry sectors to
work together to identify and respond to cyber threats.
Conclusion
While I have attempted to describe in reasonable detail the many opportunities
that rural telecom providers are seeking and the challenges they face in doing so,
there are of course any number of other issues that could be covered in this sort
of hearing. The upshot, however, is that the rural telecommunications industry is
committed to its consumers and the communities in which these small rural providers live and serve. Companies like Ritter are making every stride to respond to
the challenges they face, to deliver high-quality and affordable services to their consumers, and to fulfill the national mission of universal service through the responsible and effective deployment of cutting-edge communications infrastructure.
Adopting and retaining sensible rules of the road that create regulatory certainty
and help build a broadband future will be essential to the success of these efforts.
We look forward to ongoing efforts between the rural telecom industry and committed lawmakers such as those on this subcommittee to realize these objectives.

Mr. Kurtz?
STATEMENT OF DEAN KURTZ, VICE PRESIDENT, REGULATORY
AND LEGISLATIVE AFFAIRS, SOUTHERN REGION, CENTURYLINK
Mr. KURTZ. Thank you, Mr. Chairman, for the opportunity to

speak to you today. And just to prepare you, for a boy that takes
two syllables to say one-syllable words, 3 minutes might not make
it.
CenturyLink offers communications services to 14 million homes
and businesses in all 50 states and select international markets.
Our services include broadband, voice, video entertainment and
data, as well as fiber backhaul, cloud computing, and managed security solutions.
From our roots in Oak Ridge, Louisiana, our company has
evolved over the years through innovation and significant capital
investment. And we are especially proud of what has gone on here
in Arkansas.
In 2000, CenturyLink expanded our operations in Arkansas and
became the second-largest telecommunications provider in the state
when we purchased 230,000 access lines from GTE. At the time of
the purchase, broadband availability over that network was mini-
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mal. Since that time, CenturyLink has invested over $1 billion to
upgrade, expand, and maintain our Arkansas network, and we now
make broadband access available to 92 percent of our Arkansas
customers.
We have followed a similar pattern of investment across our national network, bringing broadband infrastructure to many rural
communities that would otherwise be left behind. Nationally, 83
percent of the areas we serve contain 10 or fewer customers per
square mile. But we have so far brought broadband access to more
than 90 percent of our customers.
While we have overcome many obstacles, serving low-density
rural markets will always be a challenge as networks evolve, with
a higher investment requirement for each customer.
CenturyLink has also sought to eliminate barriers to broadband
adoption through our Internet Basics program. For low-income customers in our service areas who qualify for the FCCs Lifeline telephone program, CenturyLink also offers broadband service for
$9.95 per month, with a netbook computer for $150.
We have conducted numerous training sessions across the country to educate current and potential customers about the basics of
digital literacy so they can connect to distance learning, telemedicine, and small-business opportunities. Since the creation of this
program, CenturyLink has signed up over 30,000 new low-income
customers, and the growth of that program is accelerating.
Looking to the future, no communications company can afford to
stand still. In 2011, we acquired a leading cloud-computing company, Savvis, and have combined their award-winning cloud services with our backbone to help make government and business customers more efficient and effective. We have also expanded our
IPTV services, offering consumers another direct competitor to
cable and satellite TV. We have connected over 16,000 towers to
the fiber network for 4G wireless. We have also grown our
cybersecurity services, and we are preparing for the transition to
an all-IP network.
There are many corners of low-density population and challenging terrain where market forces alone will never put customers
on a level playing field in the digital economy. Mr. Chairman, your
leadership has been tremendously valuable in encouraging the FCC
to proceed with reforms to its rural broadband policy that can bring
targeted support to those areas in partnership with rural
broadband providers.
We also appreciate your thoughtful consideration of cybersecurity
issues, STELA, and we look forward to working with the Committee on all these issues in the future. Thank you.
[The prepared statement of Mr. Kurtz follows:]
PREPARED STATEMENT OF DEAN KURTZ, VICE PRESIDENT, REGULATORY
LEGISLATIVE AFFAIRS, SOUTHERN REGION, CENTURYLINK
AND
Mr. Chairman and members of the Committee, thank you for the opportunity to
testify about the state of communications on the ground, and the challenge of connecting urban and rural America. CenturyLink offers communications services to
over 14 million homes and businesses in all 50 states and select international markets. Our services include broadband, voice, video entertainment and data, as well
as fiber backhaul, cloud computing and managed security solutions.
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From our roots in Oak Ridge, Louisiana, our company has evolved over the years
through innovation and significant capital investment, and we are especially proud
of our story here in Arkansas.
Rural Broadband Investments
In 2000, CenturyLink expanded our operations in Arkansas and became the second largest telecommunications provider in the state when we purchased 230,000
access lines from GTE. At the time of the purchase, broadband availability over that
network was minimal. In fact, many of our new customers in rural Arkansas did
not even have access to local dial-up Internet access. Overall, CenturyLink has invested over $1.08 billion to upgrade, expand and maintain our Arkansas network,
and we now make broadband access available to 92 percent of our Arkansas customers, offering service in every local exchange we serve.
These investments have been essential in enabling business development and
community empowerment in the state. For example, in 2010, CenturyLink provided
the redundant fiber facilities that helped New Corp bring 100 new jobs to Russellville when it built its national inbound call center. Those initial 100 jobs have grown
to over 500 jobs in the past three years. More recently in rural Mansfield, the mother of a student contacted us with an urgent need for home broadband service so her
child could participate in an education project. CenturyLinks technicians developed
a creative solution that allowed broadband service to several homes in her extremely rural area.
We have followed a similar pattern of investment across our national network,
bringing broadband infrastructure to many rural communities that would otherwise
be left behind. Nationally, 83 percent of the areas we serve contain 10 or fewer customers per square mile (compared to 13,000 per square mile in the greater Washington, DC area), but we have so far brought broadband access to more than 90 percent of our customers.
While we have overcome many obstacles, serving low density rural markets will
always be a challenge as networks evolve, with a higher investment requirement for
each customer, greater pole attachment costs, often difficult terrain, and the challenge of persuading customers to actually order broadband services once the infrastructure investments have been made.
Encouraging Broadband Adoption
CenturyLink has also sought to eliminate barriers to broadband adoption through
our Internet Basics program. For low-income customers in our service areas who
qualify for the FCCs Lifeline telephone program, CenturyLink also offers broadband
service for $9.95 per month, with a netbook computer for $150.
We have conducted numerous training sessions across the country to educate current and potential customers about the basics of digital literacy, so they can connect
to distance learning, telemedicine and small business opportunities. Since the creation of our Internet Basics program, CenturyLink has signed up over 30,000 new
low-income customers, and the growth of that program is accelerating.
Innovation for the Future
Looking to the future, no communications company can afford to stand still for
long, and CenturyLink continues to focus on investment and innovation. In 2011,
we acquired a leading cloud computing company, Savvis, and have combined their
award-winning cloud services with CenturyLinks global Internet backbone to help
make our government and business customers more efficient and effective.
We have also expanded our nascent IPTV services, offering consumers another direct competitor to cable and satellite TV with a full suite of sports, news and entertainment programming, video-on-demand, DVR, picture-in-picture and online viewing capabilities. This is a challenging business to enter as a new competitor, with
costs for sports content and broadcast retransmission rising sharply, but customers
have so far been very receptive to having additional choices.
As wireless companies continue to expand their 4G data offerings, CenturyLink
has connected its fiber network to over 16,000 towers nationally, and we expect to
build fiber to at least another 4,000 towers by the end of 2013. Another growth area
has been our managed cybersecurity services, offered to a broad range of Fortune
500 companies, government clients and small businesses. And finally, as the entire
industry transitions to a world of all-IP networks, we are exploring creative technologies to offer consumers the reliable voice, data and video services they expect
from us.
Public Policy Leadership
There are many corners of low population density and challenging terrain where
market forces alone will never put those customers on a level playing field in the
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digital economy. Mr. Chairman, your leadership has been tremendously valuable in
encouraging the Federal Communications Commission to proceed with reforms to its
rural broadband policy that can bring targeted support to those areas in partnership
with rural broadband providers.
The Committee has also approved farsighted legislation to enhance cybersecurity
by empowering the National Institute of Standards and Technologys mission to facilitate voluntary, industry-led standards and best practices that can protect our
Nations critical infrastructure from cyber threats. We are eager to see the Senate
proceed with both the Cybersecurity Act of 2013 and companion legislation to enhance cyber threat information sharing among private sector providers and with the
government.
Looking forward, we encourage you to continue the Subcommittees thoughtful
look at the technological changes and the barriers to competition in the video market, especially as the Committee considers reauthorization of the Satellite Television
Extension and Localism Act (STELA). In particular, we hope the Committee will
consider modernization of the 1992 Cable Acts rules for retransmission consent.
The Committee has also made important contributions to numerous other policy
areas, including consumer privacy, disabled access, and broadband for schools and
libraries. As telecommunications networks continue to transition to an all IP future, and carriers like CenturyLink continue to expand our broadband investments,
we look forward to working with the members of the Commerce Committee.

And Mr. Ashcraft?
STATEMENT OF GREG ASHCRAFT, CHIEF FINANCIAL OFFICER,
SOUTH ARKANSAS TELEPHONE COMPANY
Mr. ASHCRAFT. Thank you, Senator Pryor, for allowing me to be

on the panel today.
My name is Greg Ashcraft. I am CFO for South Arkansas Telephone Company. South Arkansas Telephone Company is an independent local exchange carrier in Hampton. We have 2,800 telephone customers and 1,100 broadband customers.
Today, I would just like to go over a few of the challenges the
telephone companies are facing today.
The first challenge, which Mr. Drilling has already touched on,
is the loss of customers. And it is not large into small; it is nationwide. Their percent was pretty high, but, for instance, South Arkansas Telephone Company in 1999 had 4,400 telephone customers; today we have 2,800. So that is a loss of 36 percent. So it
is a nationwide problem, and it is a major challenge.
The next challenge is uncertainty of the revenue streams, which
Mr. Strode has touched on too. The loss of customers causes a loss
of local service revenue, a loss of toll revenue, and also a loss of
access revenue.
But then in 2013 there were two plans that were implemented
that also put more pressure on revenue streams. One was we had
to lower our intrastate access rates down to the interstate access
rates level, which caused a revenue reduction.
Another plan was implemented that they would start doing a regression analysis on the universal service revenue each year. And
the regression analysis is, they look at what all the telephone companies in the country were spending and compared that to what
your company is spending on investment and expenses, and if you
are in the 10 percent of that analysis, your universal service revenue is decreased.
There is no benchmark level of what the regression analysis
amounts are, so it is very difficult for the companies to forecast
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what their universal service revenues will be. That hampers investments in broadband. So it is kind of hard to gauge. So that is a
challenge.
Another challenge is meeting the broadband demands and the
changing technologies. As you know, broadband has changed a lot
in the last 10 years. When the South Arkansas Telephone Company first started offering Internet, it was dial-up at 256K speed,
and we carried all the traffic on one T1. Now, today, the minimum
speed we offer is 6 meg, and we carry the traffic on 1 gig.
So we think we have done a very good job of meeting that challenge, but meeting that challenges has a very big price tag on it.
So in order to offer those kinds of speeds, we have had to make
capital improvements in our plant to add more remotes and put
more fiber in the ground.
So that is just a few of the challenges that the companies are facing today and they will continue to face in the future. Thank you
again.
[The prepared statement of Mr. Ashcraft follows:]
PREPARED STATEMENT OF GREG ASHCRAFT, CHIEF FINANCIAL OFFICER,
SOUTH ARKANSAS TELEPHONE COMPANY
I am the CFO for South Arkansas Telephone Company. South Arkansas Telephone Company is a small incumbent local exchange carrier (ILEC) in south Arkansas with 2,800 telephone customers and 1,100 DSL customers.
I would like to go over a few challenges that confront the Rural Telephone companies today.
The first challenge is the drastic loss of customers. The rural telephone companies
are losing customers at a staggering rate. Customers are disconnecting their
landlines and switching to mobile. At the end of 1999, SATCO had 4,400 customers.
Today we have 2,800. That is a loss of 36 percent of our customers.
Another challenge the rural telephone companies are facing is the uncertainty of
our revenue streams. With the large loss of customers it has affected our local service and toll revenues and the loss of toll means less access minutes and less access
revenue. And now in 2013 the FCC has implemented some plans that have put
more pressure on our revenue streams.
First they lowered our access rates in the access reform. Then they implemented
the USF regression analysis, that will be ran each year to see which companies are
affected. There is no benchmark that the companies can gauge this analysis on. It
depends on what all the other companies in the country spend, compared to your
company. So, this makes it impossible for the companies to forecast their revenues.
Another challenge is keeping up with broadband demand and changes in technology. Broadband has come a long way in 10 years. We started offering dial up
with a speed of 256K and didnt think we would need more than a T1 to carry
the traffic. Today our lowest speed we offer is 6 meg and we have a 1GB connection
to carry the traffic. We feel that the companies in Arkansas have done a very good
job at meeting this challenge. But meeting this challenge comes with a very big
price tag. In order to get these kinds of speeds to our customers, we have had to
make major capital expenditures in our plant by putting in more remotes and more
fiber.
Thank you for the opportunity to be a part of this meeting.

A few moments ago, I said Dean Taylor. Of course, everybody understood I meant David Russell.
[Laughter.]
Senator PRYOR. Dean Taylor couldnt be here with us today, but
we are delighted to have you. Go ahead.
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STATEMENT OF DAVID RUSSELL, VICE PRESIDENT OF
EXTERNAL AFFAIRS, VERIZONS SOUTH AREA
Mr. RUSSELL. Thank you, Chairman Pryor, Commissioner

Rosenworcel, and fellow panelists and ladies and gentlemen. I am
David Russell. I am Vice President of External Affairs for Verizons
South Area, representing Dean, who sends his regrets.
I am pleased to be able to report that Verizon has invested significantly in Arkansas in terms of advancing its network, employment, and community support. We were the first wireless carrier
to bring 4G LTE technology to Arkansas.
I need to note here that 4G and 4G LTE are different technologies. LTE stands for long-term evolution, and it is a new
technology and is viewed industry-wide as the global standard, the
future of wireless technology. The big difference to the consumer,
Senator, is it is a lot faster.
Verizon launched this service in several cities in northwest Arkansas in July 2011. We were the only provider of this technology
in Arkansas for about the next year. We continued our aggressive
rollout of this technology across Arkansas and announced the substantial completion of our LTE coverage across the state just 2
months ago. Verizon Wirelesss network covers almost 97 percent
of Arkansass population, and, year to date, more than 99 percent
of that network is also covered by our 4G LTE network.
This network is beneficial to customers because its speed allows
them a real-time experience when they are mobile. They can
upload, download, use the Internet, watch videos all at similar
speeds as if they were connected by a copper landline.
Verizons network is continuously recognized by J.D. Power,
RootMetrics, and other third parties as the most reliable in the
country. And we continue to prove that reliability to our customers
in Arkansas and across the nation. On average, Verizon annually
invests more than $6 billion in our network across the country.
This year in Arkansas, we will invest $100 million in our wireless
network to reinforce that reliability and redundancy.
So what does it mean for business and government? Well, in
business, it means that companies in any industry can be mobile.
They can monitor their fleet vehicles in real time. First responders
can provide doctors with live video triage while a patient is en
route to a hospital. Police officers can access any department or
state data they need from their units and file reports from the
scene.
As schools integrate new technology like digital tablets in the
classroom, teachers rely on the connectivity and speed of LTE technology to support a childs learning experience and keep them connected.
Just last week, I was up in north Arkansas to present the Cotter
School District, which is in a very rural part of the state, with a
Verizon Foundation grant for $50,000 that will support 300 students in adapting broadband technologies to enhance science, technology, engineering, and math education. Now, Cotter is very rural,
but these kids are not missing an opportunity to learn because they
are using our LTE technology to stay connected.
Verizon employs a diverse workforce across Arkansas, mostly in
sales but in a number of other fields. For example, Little Rock is
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home to a customer service center that will be hiring several hundred new positions this year, and we are hiring employees in other
professional positions as well.
Verizon is a Fortune 16 company that is a good corporate citizen
in Arkansas, bringing new and reliable technology to the state,
supporting businesses large and small, and enhancing the economy.
Senator Pryor, we appreciate your continued leadership on many
important issues in our industry, including your co-sponsorship of
an amendment earlier this year that would have extended the moratorium on taxation of the Internet.
Thank you very much. That concludes my remarks.
[The prepared statement of Mr. Russell follows:]
PREPARED STATEMENT
OF
DAVID RUSSELL, VICE PRESIDENT

VERIZONS SOUTH AREA
OF
EXTERNAL AFFAIRS,
Chairman Pryor, thank you for the opportunity to testify here today. My name
is David RussellVice President of External Affairs for Verizons South Area. Im
here today representing the President of our South Central Region for Verizon Wireless, Dean Taylor, who had a conflict and was unable to attend. Deans region includes the entire states of Arkansas and Oklahoma, as well as West TN and North
MS.
Verizon Wireless acquired Alltel Corporation in 2009 and our region headquarters
are located where Alltels corporate headquarters previously were located here in
Little Rock.
Verizon has invested in Arkansas in terms of advancing its network, employment
and community support.
Network
Verizon was the first wireless carrier to bring 4G LTE to Arkansas. I would like
to note that 4G and 4G LTE are different technologies; LTE (Long Term Evolution)
is new technology and is viewed industry-wide as the global standard . . . the future of wireless technology.
Verizon launched 4G LTE in several cities in Northwest Arkansas in July of
2011;we were the only provider of 4G LTE in Arkansas for about the next year. We
continued our aggressive rollout of 4G LTE across Arkansas in cities big and
smalland announced the substantial completion of our 4G LTE coverage across
Arkansas in June of this year.
Verizons wireless network covers almost 97 percent of Arkansas population and
more than 99 percent of that network is also covered by our 4G LTE network.
4G LTE is beneficial to customers because its speed allows them a real-time experience while theyre mobile. They can upload, download, use the Internet, watch videosall at similar speeds as if they were connected by a copper landline. Verizons
network is continuously recognized by J.D. Power, Root Metrics and other third parties as the most reliable in the country, and we continue to provide that reliability
to our customers in Arkansas and across the Nation.
Network Investment
On average, Verizon invests more than $6 billion in its network nationally.
This year in Arkansas, we will invest around $100 million in our wireless network
to reinforce that reliability and redundancy.
Business
What does this investment mean for business or government?
In business it means companies in any industry can be mobile, they can monitor their fleet in real time.
First responders can provide doctors with live video triage while a patient is
en route to the hospital.
Police officers can access any department or state data they need from their
units, and file reports from the scene.
live monitoring of Arkansas crop fields lets a farmer know when the soil needs
nutrients or the crops need watering.
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As schools integrate new technology like digital tablets into the classroom,
teachers rely on the connectivity and speed of LTE to support a childs learning
experience and keep them connected. Just last week I was up in north Arkansas
to present the Cotter School Districtin a rural and underserved area of Arkansaswith a Verizon Foundation grant for $50,000 that will support 300 students in adapting broadband technologies to enhance Science, Technology, Engineering and Math (STEM) education. Cotter is ruralbut these kids arent
missing an opportunity to learn using technology because theyre connected on
4G LTE.
Workforce
Verizon employs a diverse workforce across Arkansas, mostly in sales, but in a
number of other fields. For example, little Rock is home to a Customer Service Center that will be hiring several hundred positions this yearand we are hiring employees in other professional positions as wellcontributing to Arkansas economy
statewide.
Verizon is a Fortune 16 company that is a good corporate citizen in Arkansas
bringing new and reliable technology to the state, supporting businesses large and
small, and enhancing Arkansas economy. Senator Pryor, we appreciate your continued leadership on many important issues to our industry, including your cosponsorship of an amendment earlier this year that would have extended the moratorium
on taxation of the Internet.

Ms. Bowles?
STATEMENT OF L. ELIZABETH BOWLES, PRESIDENT AND
CHAIRMAN OF THE BOARD, ARISTOTLE, INC.
Ms. BOWLES. Thank you, Chairman, Commissioner. Thank you

for having me.
I am Elizabeth Bowles. I am President and Chairman of the
Board of Aristotle, Inc. We are a fixed wireless broadband provider
and interactive media agency headquartered here in Little Rock.
Additionally, I am the immediate past President of the fixed wireless trade association, Wireless Internet Service Providers Association, also called WISPA.
The FCC found that 76 percent of those without broadband live
in rural America. And Arkansas is a rural state. But more than
that, we are a rural state with mountains and granite and topographical challenges that can make deployment of wireline solutions difficult and expensive.
Although it is often overlooked, fixed wireless broadband can
solve the challenges of delivering broadband to many of these rural
areas. And WISPs like Aristotle are doing that now, primarily
through the use of unlicensed and licensed-light spectrum.
Fixed wireless broadband is as reliable as wireline solutions, is
capable of the same speeds, and is far less expensive to deploy. For
example, Aristotle only needs between 40 and 120 customers to justify moving into an area. The cost of fixed wireless deployment is
fractional compared to the cost of deploying fiber.
And even if fiber is the ultimate goal, fixed wireless is far
quicker to deploy. Aristotle can deploy a tower in less than a week,
and fixed wireless can serve as the last-mile delivery mechanism
while fiber is being trenched so nobody has to wait for fiber.
And fixed wireless broadband can and should serve as a backup
for wireline solutions to ensure that broadband connectivity is not
lost. We heard earlier about a fiber cut. That type of thing can be
resolved by a backup fixed wireless solution.
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When we look at broadband deployment as a policy matter, it is
critical that we create a blended solution that takes into account
fixed wireless broadband. Unlicensed spectrum is crucial to that,
and a balanced policy that makes room for both licensed and unlicensed spectrum uses is the only responsible path. Licensed spectrum is important, but so is unlicensed.
And in addition to balancing licensed versus unlicensed uses, the
FCC should also balance the needs of urban areas with those of
non-urban areas. The cellular congestion that is always in the news
is a real problemin Manhattan. It is not that much of a problem
in Malvern. The FCC can and should make different sets of rules
for urban and non-urban areas. For example, in 5 gigahertz, the
FCC could prioritize small cells in urban areas by allowing priority
for higher-power uses in rural areas.
In other words, just because a policy is perfect for a high-density
market does not make it good policy for every market. And we
should ensure that any policies are balanced.
We all agree that every rural Arkansan and every rural American deserves the same access to broadband as somebody in Dallas.
The only way to accomplish this is through a balanced spectrum solution that not only protects the availability of usable unlicensed
spectrum, but also makes additional spectrum available for both
unlicensed and licensed-light uses.
Thank you.
[The prepared statement of Ms. Bowles follows:]
PREPARED STATEMENT OF L. ELIZABETH BOWLES, PRESIDENT
AND CHAIRMAN OF THE BOARD, ARISTOTLE INC.
Good morning Chairman Pryor and Members of the Subcommittee. I am Elizabeth
Bowles, President and Chairman of the Board of Aristotle Inc., a broadband service
provider and interactive media company based here in Little Rock. I am heavily involved in the local community, supporting and volunteering for a number of Arkansas causes. In addition to my local involvement, Ive also served for three years as
the President of WISPA, the Wireless Internet Service Providers Association, which
is a national trade association that advocates on behalf of fixed wireless broadband
providers across the country. Im pleased to welcome you to my home town, and Im
privileged to speak to you today about the way wireless communicationsand in
particular, fixed wireless communicationsare changing the lives of Arkansans and
other consumers in rural and micropolitan America.
As President of a local broadband company as well as of a national trade organization, I have a unique insight into the way that legislators and regulators in Washington, D.C. can help farmers, teachers and children in places like Scott, Stephens,
Osceola, and Star City. Although we are currently sitting in a metropolitan area,
you only need to go five miles outside the Little Rock city limits to find rural America.
In its Eighth Broadband Progress Report issued last year,1 the FCC found that
[a]pproximately 14.5 million of the 19 million (or 76 percent) of Americans without
access to fixed broadband meeting the speed benchmark reside in rural areas. . . .
The percentage of Americans without access in rural areas is 23.7 percent as compared to 1.8 percent in nonrural areas. These figures indicate that nearly one in
four rural Americans lack access to fixed broadband meeting our speed benchmark.
This means that children in these areas cannot access online educational information, rural telemedicine is not possible, and economic development efforts are
1 See Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All
Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, as Amended by the
Broadband Data Improvement Act, Eighth Broadband Progress Report, 27 FCC Rcd 10342,
10370 (2012).
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thwarted because few companies will locate in an area without sufficient broadband
access. Aristotle and similarly-situated WISPs are rectifying this broadband gap.
Aristotles deployment strategy is to bring broadband access to unserved and underserved areas of the state. While we do offer broadband service in the central Arkansas metropolitan area, it is the areas outside of the city where fixed wireless
broadband brings the greatest economic development benefit, and it is those markets where Aristotle focuses our expansion efforts. Because fixed wireless broadband
is much less expensive and faster to deploy than fiber or other wireline solutions,
Aristotle can make a persuasive business case for entering markets that larger,
wireline providers cannot justify. Most WISPs go where the telephone company and
the cable companies do not because its too costly to run wires, cables, and fiber to
areas that are sparsely populated or challenged by difficult terrain. By way of contrast, Aristotle only needs between 40 and 120 customers to recoup its investment
within 18 months following deployment of a tower.
WISPs are small, local employers who give back to their communities and contribute to local economies. Often WISPs are the first Internet providers to come
back online following a national disaster. WISPs enable cellular data offloading that
alleviates congestion of cellular phones. And we do this without taking a single Federal subsidy dollar.
WISPs are able to deploy quickly and cost-effectively in no small part due to the
availability of unlicensed spectrum. Unlike licensed spectrum, which belongs exclusively to a single company in a defined geographic area, unlicensed spectrum is
shared by anyone who can come up with the technology to use it. As a result, a
vast number of consumer devices, such as baby monitors and telephones, co-exist
with fixed wireless devices in the unlicensed spectrum space. There has been a
boom of innovation in the unlicensed space over the last few decades. The unlicensed economy created by this innovation has allowed for an unparalleled development of consumer and technological advancements and subsequent reduction in
equipment costs. The competition created by the availability of unlicensed spectrum
has in turn allowed WISPs like Aristotle to deploy affordable broadband to nonurban areas in a cost-effective and efficient manner.
For this reason, it is critical that spectrum policy be balanced. Licensed spectrum
is important and necessary, but we also must make sure that sufficient unlicensed
spectrum is available for Wi-Fi offload, small cells, andmost importantlyfor
rural communities and fixed broadband services. Part of this balance is predicated
on the fact that new spectrum is not being inventedit must be transferred to the
government, re-purposed and shared in creative ways. Last year, the PCAST Report
rightly found that sharing spectrum with the Federal Government or commercial incumbents may be the only way to bridge the spectrum gap when spectrum cannot
be made available on a nationwide basis.
WISPs support the sharing approach because our spectrum needs are local and
regional and not nationwide, so carving out areas to protect government radar and
satellite earth stations do not present problems, especially when the trade-off is
more unlicensed spectrum everywhere else. And as WISPs build networks and put
unlicensed spectrum to use, we employ people, incent innovation, and enable rural
consumers and businesses to have the same broadband experience as their urban
and suburban contemporaries.
In the Spectrum Act that Congress passed last year, Congress took an important
step to help promote unlicensed spectrum. It required the NTIA and the FCC to
look at ways to make available up to 195 megahertz of spectrum in the 5 GHz
band120 megahertz in the 53505470 MHz band and 75 megahertz in the 5850
5925 MHz band. These bands are adjacent to the 3.65 band that WISPs already use,
so the ability to gain access to more spectrum in adjacent bands is critical. This is
not to diminish the difficult technical issues associated with sharing the adjacent
bands with other services that already use (or are licensed to use) them. But these
technical challenges should not stand in the way of creative solutions.
And, of course, it is virtually impossible to discuss spectrum policy without a word
on incentive auctions, the process Congress authorized that will transfer broadcast
TV spectrum to licensed wireless use so the mobile carriers can increase their spectrum holdings. What is important to rural Americans is not so much how that auction plays out but rather what the impact will be on the TV white spacesthe vacant TV channels that will remain for unlicensed use. Because of the superior propagation characteristics of this spectrum, WISPs will be able to add spectrum to their
existing inventory to accommodate greater capacity and to extend networks further
into rural and remote areas. More than any other unlicensed band, TV white
space spectrum is well suited for penetration deeper into rural areas where there
are limited or no terrestrial options. This is especially true for large areas of Arkan-
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sas, where trees, foliage, and rolling hills make TV white space particularly attractive.
The ability to reap the benefit of this spectrum is threatened on two fronts: First,
the FCC may be tempted to auction every single slice of white space spectrum in
order to maximize the money obtained through the incentive auction process. This
would be a serious mistake. In rural areas where there is typically more white
space spectrum available, the need for this spectrum is also greater. In the balance
of equities, it is clear that the consumer welfare benefits of allowing unlicensed use
of rural white space far surpasses any immediate and short-term benefit the government could gain in terms of revenue from an auction. Any revenue received from
an incentive auction would be one-time and limited, whereas the ability to deploy
reliable fixed high-speed broadband access to the town of Star City would produce
far greater economic benefits in terms of a larger tax base and greater economic and
workforce development.
The second threat comes from re-packing, which is the process of relocating TV
stations to alternative spectrum to make way for auctioned spectrum. When repacking the TV band, the FCC should do what it can within statutory limits to optimize the remaining spectrum for fixed unlicensed use. Technical rules already limit
the use of white spaces, and a re-packing process that ignores WISPs and other
innovative users will be a lost opportunity.
Some equipment manufacturers are pressing ahead with white space equipment;
others are on the sidelines waiting to see how the auction rules are constructed and
result of the auction. The white space economy is at a crucial tipping point, so it
is particularly important that the FCC insures that sufficient usable white space
remains after the auction to provide the broadband benefits to rural America that
white space spectrum affords.
Often when discussing spectrum, the small-cell debate comes to the fore. Late last
year, the FCC initiated a proceeding to make available up to 100 megahertz of spectrum in the 3.5 GHz banda band that sits adjacent to the 3.65 GHz band that
many WISPs use. In the three-tiered spectrum access system to allow sharing
with Federal and commercial incumbents, the FCC proposed authorizing small
cells in at least a portion of this band. This proposal, of course, is designed to provide additional capacity for bandwidth hungry, urban areasand there is nothing
wrong with thatprovided that the FCC does not miss the opportunity to allow
higher-power use in rural areas alongside small cells. This is not an all-or-nothing
propositionsmall cells and higher-power facilities can co-exist. In fact, the FCC
canfor the first timeadopt different rules for urban areas and rural areas. In
urban areas, the FCC can prioritize small cells, and in rural areas it can prioritize
higher-power operations. Incumbents can be protected through geographic exclusion
zones, and unlicensed users can coordinate through a database. This is another example of how spectrum can be responsibly shared through creative spectrum management policies that balance the interests of rural and urban areas. Creative solutions like this are critical if we to ensure that every Arkansan has equal access to
broadband Internet and the economic benefits it conveys.
I know I dont need to tell you that access to broadband is critical to rural and
underserved areas. But as Congress and the FCC moves forward with spectrum policy, we must avoid the temptation to impose on rural America solutions designed
to rectify problems limited primarily to large, urban areas. While bandwidth congestion and the need for additional spectrum for cellular carriers is often in the news,
the fact is that most of this congestion occurs in major metropolitan areas like New
York, L.A. and Chicago. It simply doesnt exist to the same extent in Little Rock,
much less in Malvern. In these areas, its access to unlicensed spectrum for fixed
service to residential areas that should be a focus of spectrum policy. This fact is
self-evident, and we must ensure that a policy designed for high-density markets
does not become the default policy for every market.
Finally, I would be delinquent if I didnt say something about USF/CAF. Earlier
in my remarks I mentioned that WISPs do not receive Federal subsidies. This is
due in part because WISPs are ineligible for Universal Service Fund support because they do not offer telecommunications services as well. However, as USF reform moves forward, the WISP community remains concerned that the FCCs rules
could allow subsidized carriers to obtain financial support for areas where WISPs
already provide broadband service and where an unsubsidized telephone company
offers voice services. Additionally, we disagree with the FCCs proposal to require
WISPs to contribute to USF when they are statutorily prevented from taking funds
from the program. These sorts of rules are inherently unjust and inequitable, but
in addition they make it more difficult for WISPs to build out in the face of a subsidized competitor. Having sufficient funds for USF may be important, but it should
not come at the expense of privately-funded small businesses.
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For many Arkansansand for that matter all Americansresiding in rural and
remote areas, access to unlicensed spectrum is the one element that government can
and must provide. WISPs can and do use that resource and add their own capital,
ingenuity, perseverance and good old-fashioned elbow grease to provide broadband
access to the millions of Americans that today do not have access to affordable
broadband services. We should ensure that the policies we adopt are balanced and
enable rural families to receive the broadband access they deserve.
Thank you for your time and interest, and I look forward to your questions.

Mr. Sanders?
STATEMENT OF STEVEN G. SANDERS, JR., PRESIDENT AND
GENERAL MANAGER, NORTHERN ARKANSAS TELEPHONE
COMPANY (NATCO)
Mr. SANDERS. Thank you, Mr. Chairman.

My name is Steven Sanders, and I am the General Manager of
Northern Arkansas Telephone Company. NATCO is an independent local exchange carrier currently employing 43 people that
was founded in 1951 by my grandfather. It presently serves about
5,000 access lines in 6 northern Arkansas exchanges in Marion and
Boone Counties.
Companies like NATCO face a formidable task: building communications networks in areas where there often isnt a business case
for doing so because of sparse population and rugged terrain.
Thanks to the efforts of Senator Pryor and others, NATCO in 2010
received a Broadband Initiatives Program grant loan from the
Rural Utilities Service that will soon enable us to provide fiber-tothe-home broadband services at initial speeds of 20 to 50 megabits
per second to customers in our Diamond City exchange.
NATCO also upgraded about half of its Bull Shoals exchange
during 2009 and 2010 with fiber-to-the-home facilities but suspended that project in December 2011 due to the uncertainties
arising from the FCCs November 2011 USFICC order. Many of
the reforms to the Universal Service Fund and intercarrier compensation regime initiated by the FCC in the 2011 order have
caused rural ILECs to think twice about making further investments in their networks.
The Federal USF program has had remarkable success in enabling over 95 percent of U.S. households to connect to the public
voice network and in beginning the transition to a public
broadband network. However, the Nation will not be well-served if
its rural residents have access to only 4-megabits-per-second
download and 1-megabit-per-second upload speeds supported by the
FCC in rural areas, while their urban counterparts can obtain 100
megabits or better in both directions that are being supported by
the FCC in urban America.
This will have an effect which deprives them of the use of many
business, educational, medical, and entertainment applications
available to urban residents. This is the worst sort of digital divide
and will deny rural families of the opportunity to participate fully
and fairly in the economic and social life of the Nation.
The quantile regression analysis model is a case in point where
the FCC has created unpredictability and uncertainty that has
brought broadband investment by rural ILECs to a virtual halt. If
NATCO builds a fiber project in 2014, it will not begin to receive
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any USF support to help recover the cost until 2016. And then the
amount it receives will be subject to potential decreases each year
due to the operation of the QRA, which calculates annual USF support each year on the basis of coefficients determined by the investment and operating costs of hundreds of other rural ILECs of
which I have no knowledge. The end result is that I cannot assure
lenders that NATCO can cover the costs of potential infrastructure
projects.
In conclusion, broadband has incredible benefits to offer all Arkansans, but it is the rural economy, the one that is most geographically isolated, that stands to gain the most from the way
that broadband shrinks the distance between users.
NATCO and others like it are committed to serving our communities. There is an opportunity here for Federal policymakers to assist us in building the networks of the future, and that is by making sure policies are in place to adhere to the principles and provisions of the Communications Act.
Thank you.
[The prepared statement of Mr. Sanders follows:]
PREPARED STATEMENT OF STEVEN G. SANDERS, JR., PRESIDENT AND GENERAL
MANAGER, NORTHERN ARKANSAS TELEPHONE COMPANY (NATCO)
My name is Steven Gill Sanders, Jr., and I am the President and General Manager of Northern Arkansas Telephone Company (NATCO).
NATCO is an independent, incumbent local exchange carrier, currently employing
43 people, that was founded in 1951 by my grandfather. It presently serves approximately 5,000 access lines in six rural northern Arkansas exchanges: the Flippin,
Bull Shoals and Pyatt exchanges in Marion County, and the Lead Hill, Diamond
City and Omaha exchanges in Boone County.
NATCO has a very rural and high cost service area. It is scattered over sections
of a two-county area that no one else wanted to serve when my grandfather and
father were putting the company together during the 1950s and 1960s. It is sparsely
populated, with only Bull Shoals (2011 population: 1,948) and Flippin (2011 population: 1,354) having more than a couple hundred people, and the entire area having
less than 7.6 lines per square mile. Its rocky terrain makes it very expensive to bury
telecommunications lines, while wind (periodic tornados) and severe electric and ice
storms wreak regular havoc upon overhead lines.
While Im here today solely as a representative of my company and lifelong resident of the state of Arkansas, there are hundreds of small, rural independent local
exchange carriers (ILECs) across the country that have similar thoughts and views
as the ones Im about to present. Companies like NATCO face a formidable task
building communications networks in areas where there often isnt a business case
for doing so because of sparse population and rugged terrain. If it were not for the
services provided by NATCO and other rural telecommunications providers, many
Americans, small businesses and anchor institutions in rural areas would be cut off
from the benefits of modern communications. In addition, much of the wireless traffic in rural areas runs from towers through our networks to the broader network.
Without the underlying wireline network, cell phones would not work.
Nonetheless, NATCO recognizes that the public telecommunications network is
evolving from a voice network to a broadband network, and has been working hard
to bring digital subscriber line (DSL) and other broadband services to its customers.
We presently provide 65-to-70 percent of our rural customers with some form of
broadband service, generally at broadband speeds in the 1 Mbps to-8 Mbps range.
Thanks to the efforts of Senator Pryor and others, NATCO in 2010 received a
Broadband Initiatives Program (BIP) grant-loan from the Rural Utilities Service
that will soon enable us to provide Fiber-to-the-Home (FTTH) broadband services
at initial speeds in the 20-to-50 Megabits per second range to over 400 customers
in our Diamond City exchange. NATCO also upgraded about half of its Bull Shoals
exchange with FTTH broadband facilities during 2009 and 2010 but suspended that
project in December 2011 due to the uncertainties arising from the FCCs November
2011 USF/ICC Order. Many of the reforms to the Universal Service Fund (USF) and
intercarrier compensation (ICC) regime initiated by the FCC in its 2011 Order have
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caused rural ILECs to think twice about making further investments in their networks.
NATCO understands that this is a time of economic uncertainty and budget deficits, and that many are seeking re-examination of the continued need for many government programs. However, the Federal USF program has had remarkable success
in enabling over 95 percent of U.S. households to connect to the public voice network, and in beginning the transition to a public broadband network. It is both sad
and frustrating to people like me who have grown up in the industry that the FCC
has limited USF support for rural telephone companies to the $2 billion aggregate
amount they received in 2011 at a time when they need to make substantial investments in fiber facilities to upgrade their broadband services. The nation will not be
well served if its rural residents have access to only the 4 Mbps download speeds
and 1 Mbps upload speeds supported by the FCC in rural areas while their urban
and suburban counterparts can obtain the 100 Mbps or better broadband speeds in
both directions that are being encouraged by the FCC for urban America. This not
only means that rural residents will have to wait much longer for information to
appear on their computer screens, but more significantly, deprives them of the use
of many of the business, educational, medical, and entertainment applications available to urban residents. This is the worst sort of digital divide and will deprive
rural families of the opportunity to participate fully and fairly in the economic and
social life of the Nation.
In fact, let me emphasize what should be one of the fundamental principles of
telecommunications lawnamely, if all Americans are going to have equality of opportunity, rural residents need reasonably comparable access to the same broadband
transmission and content as urban residents at rates that are reasonably comparable to the rates paid by urban residents. This principle is already in law, as
Section 254(b)(3) of Communication Act, which states that Federal support mechanisms for rural communications should be specific, predictable and sufficient.
However, it needs to be much more thoroughly implemented and enforced.
Even within its $2 billion USF budget for rural telephone companies, the FCC has
created unpredictability and uncertainty that has brought broadband investment by
RLECs to a virtual halt. The FCCs Quantile Regression Analysis (QRA) model is
a case in point. First, it is based upon the myth that RLECs have a surplus of capital available and that they are therefore inclined to over-invest in unnecessary infrastructure projects in order to maximize their USF support. I dont know of any
such companies and can guarantee you that I have to provide detailed justifications
and projections to my Board and lenders before I can get approval of NATCOs infrastructure investments. More important, the QRA puts managers like me in an
impossible position. If I propose a $3 million fiber upgrade for 2014, I will not begin
to receive any USF support to help recover the cost until 2016, and then the amount
I receive will be subject to significant potential decreases each year due to the operation of the QRA which calculates my maximum annual USF support each year on
the basis of coefficients determined by the investment and operating costs of approximately 800 other rural ILECs of which I have no knowledge. The end result
is that I cannot assure my Board and lenders that I can recover the costs of potential infrastructure projects. I have had to suspend our Bull Shoals fiber upgrade and
have not been undertaking additional broadband upgrades (other than the BIP
project in Diamond City).
In addition, the FCC is presently proposing to reduce significantly the authorized
rate of return (ROR) for rural ILECs on their interstate infrastructure investments.
The FCCs proposed process ignores the procedure adopted by Congress in Section
205 of the Communications Act, and disregards pleas from the industry to wait until
the effects of its 2011 reforms can be discerned before cutting ILEC revenues further. The FCCs ROR proposal is further defective because it is based upon interest
rates that are unlikely to remain at their current historic lows and upon the capital
costs of much larger companies which often have little or nothing in common with
rural ILECs.
Part of making sure that broadband continues to reach rural Americans is ensuring that the USF is on stable footing. As explained above, the FCC has begun the
process of modernizing the distribution side of the fund with mixed results. But it
also must begin reform of the contributions sidethe method by which consumers
pay into the fund. The traditional contribution base, which was once heavily related
to long distance usage, is changing because of things such as e-mail, cellular service,
and other movement away from the long distance network.
As we look to expand our broadband network in rural areas, we also confront the
issue of household broadband adoption. The FCC has recognized the importance of
video programming in encouraging broadband adoption. Our customers need access
to high-speed broadband connections in order to take full advantage of online
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streaming video services such as Netflix or Amazon Prime. Sufficient and predictable funding for broadband buildout is essential in enabling rural consumers to access the diverse video programming options available online. Rural broadband providers are also encountering increasing difficulties and expense to obtain retransmission consent from broadcast stations. When Congress enacted retransmission
consent in 1992, it set no limits in Section 325(b) of the Communications Act on
what broadcasters could require for their consent. Over the years, broadcasters have
determined that rural telephone companies and other small CATV operators need
the broadcasters more than the broadcasters need them, and have been increasingly
using this concept to demand larger and larger retransmission consent payments
and other additional consideration. Likewise, many satellite programmers charge
small operators much more that large CATV companies for their program channels.
Even with programming cooperatives that many rural ILECs use, they still pay
much more than the CATV MSOs [multiple system operators] for the most popular
satellite channels.
Whereas no one wants Congress to regulate program content, there ought to be
a national debate about the non-discriminatory pricing of such content so that people in all portions of the country and customers of both large and small carriers can
have reasonably comparable and affordable access to it.
In conclusion, broadband has incredible benefits to offer to all Arkansans, whether
rural, urban or suburban. But its the rural economy, the one most geographically
isolated, that stands to gain the most from the way broadband shrinks the distance
between users. My company and others like it are committed to serving our communities. Theres an opportunity here for Federal policymakers to assist us in building
the networks of the future and that is by making sure policies are in place that adhere to principles and provisions of the Communications Act. I look forward to working with you to achieve this goal.

We have covered a lot of ground here. I want to dive in first, if
I may, with Eddie Drilling. Mr. Drilling and I first met way, way,
long time ago when he was with Southwestern Bell Telephone. And
he really has had a front-row seat to so many changes, like many
of you had, but he has had a front-row seat to so many changes
in the industry.
And I would like tolet me start, if I may, Eddie, with you on
the IP transition. That is just one of the many changes that are
coming around.
First, could you explain to the Subcommittee what I mean by IP
transition? Second, if you could give us an update in terms of
where your company is. Because I would like to hear from all the
companies on where they are on IP transition.
Mr. DRILLING. So this years and years of front row seat, basically you are just telling me I am old?
[Laughter.]
Senator PRYOR. Yes.
Mr. DRILLING. Is that what you are kind of getting around?
Senator PRYOR. Me, too.
Mr. DRILLING. I appreciate that, Senator. Thank you.
Well, you know, I guess the IP transitioning is something a little
bit different to different people, different companies. But, you
know, basically what I was explaining in my remarks is that this
is taking place before our very eyes. You know, the fact that we
have customers that are leaving our traditional TDM switch network at the rate that they are leaving it and either going with a
wireless-only solution, an IP solution, VoIP, voice over Internet protocol, cable, who is providing service, you know, over VoIP, it is a
very competitive environment. So this transition away from traditional landline-type services to an IP solution is what we are talking about.
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And, you know, you would thinkin our case, I mentioned that,
you know, we were down to, like, 17 percent of our residential living units actually having a traditional landline, TDM-type service.
And you would think that that would start to level off, but, in fact,
what we are seeing even this year is that the rate of people moving
away from traditional service is even accelerating.
So, you know, we are obviously still investing to try to keep up
maintaining and keep up with what traffic there is on our old network, but it presents a challenge just because we obviously see the
majority of our customers going in a different direction, wanting
higher speeds of bandwidth. They want, in many cases, more extensive wireless coverage and LTE coverage, which we are accommodating.
And I think, you know, what we are also seeing, you know, 6
years ago we didnt know what an app was. You know, it wasnt
even in our vocabulary. And now there are millions of these being
created every day. You know, most of the world now is carrying
around a smartphone. Basically 100 percent, over 100 percent of
the people are carrying a wireless device. That is how their
connectivity is coming to them. We are seeing more and more wireless data being consumed.
So this transition to how people are communicating, the IP networks that are carrying all these traffic, we have seen just in the
last 5 years that increase by 30,000 percent over our network. And
Arkansas is no different than any other state, even though we are
more rural; we consume a lot of wireless data. So the demand is
there, and I think we are going to see over the next 6 years that
continue to go up exponentially.
Video is going to drive a lot of this. You know, the applications
and the educational opportunities, the healthcare opportunities, agriculture, all these are going to be much more video-centric. And
that is going to drive a lot more need for IP connectivity and bandwidth, spectrum, in order to accommodate that.
Senator PRYOR. And the other thing that has changed considerably over the years is your competitors, right? You have more competitors
Mr. DRILLING. We have had a front-row seat for that, too.
[Laughter.]
Mr. DRILLING. Very much so.
Senator PRYOR. And it is nice that
Mr. DRILLING. They are all around me here.
Senator PRYOR. Yes, it is nice that they are all sitting here all
calm and everybody is nice to each other.
[Laughter.]
Senator PRYOR. Because in the marketplace, you are in there
beating each others brains in, right?
Mr. DRILLING. You know, I love these guys.
[Laughter.]
Mr. DRILLING. It was good to be a monopoly.
[Laughter.]
Mr. DRILLING. No, but it is a very, very competitive model.
And, you know, I would say that, in our case, as well, you know,
we have 110 wire centers or towns that we serve in Arkansas. Half
of those have living units of under 2,500 peopleor 2,500 living
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units. So we serve a whole lot of rural territory, as well, and we
still see these dynamics in that marketplace, as well.
Senator PRYOR. So, if I can, Mr. Gardner, let me ask you some
of those same questions about where your company is on IP transition. Mr. Drilling mentioned the data usage and how that just
seems to go up, it seems like, every year exponentially.
So tell us where you are and how you are meeting some of these
challenges.
Mr. GARDNER. Thank you.
I think Mr. Drilling did a great job of describing what is going
on on the residential side. There is a great deal of change, and we
have seen that as well.
At Windstream, we have really made a ton of investments on the
enterprise side and are really converting our network very quickly
to IP as well, adding softswitches, building fiber to the tower for
companies like Verizon and AT&T. So it is happening every day.
We are seeing very similar things.
I would say that we are a bit unique in that we are a competitive
access provider, as well, in many states and some large markets,
as well, and here in Little Rock. And in those markets, we are competing with AT&T, Verizon, some of the cable companies, as well.
And I think it is a little bit different on the business side.
And so, as we think about the IP transition, I think that we have
to think about those different models. It is not quite the same as
on the residential side. There arent as many choices for businesses. And competitive access providers like Windstream provide
a unique option in the marketplace for customers. And oftentimes
when we sell to a customer, we need to rely on a connection with
AT&T or Verizon to reach that customer as part of our solution.
And so it is something that we are very focused on.
And the other thing that I think, as we think through that, that
is really challenging in our market, because we do have some huge
companies, some midsize companies, and some small companies,
we are all on different paths. And I think as we think through
these IP transition solutions, we just have to be aware of the fact
that companies are on different migration paths. We want the system to all work together so that customers at the end of the day
are best-served.
So I absolutely agree that something needs to change. It is critically important. For us to serve our customers, we have to convert
our networks very quickly to IP, and I think the regulatory change
to support it is critical. And, again, I think that, when you think
about it, just think about business a little bit differently than you
do on the residential side.
Senator PRYOR. OK.
Mr. Strode, did you have anything to add on IP transition and
data usage, et cetera? And, by the way, how many customers to you
have, just so we will know?
Mr. STRODE. Roughly 10,000 voice customers, 15,00016,000
video customers, high-speed Internet customers probably in the
12,000 range in Arkansas.
We provide an IP-based voice service over our hybrid fiber-coax
cable network. Where we are the primary video provider in those
areas, we are looking at how we can transition our traditional
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ILEC territories to an IP-based service. And, certainly, our transmission between exchanges and to the outside world, some of that
has already transitioned to IP-based services.
Just anecdotallyand I certainly dont say this to be critical of
AT&T. As you commented, as Mr. Drilling said, his competitors are
here. I looked around at this panel, and Ritter Communications
partners with, works with, provides wholesale services to every
company on this panel, I think, except Aristotle. But we are also
competing with everybody on this side of the table.
[Laughter.]
Mr. STRODE. And certainly, you know, to some extent, our services compete with wireless services that are provided by Verizon,
although we provide wholesale transport services to Verizon. So it
is an interesting ecosystem that we are in.
My father-in-law has a defibrillator implanted in his chest and
has a device on his nightstand that every night takes readings remotely from that defibrillator. A couple years ago, he became a
he lives here in Little Rock. He is a customer of AT&T. He decided
to switch to U-Verse services, and that was great. They were really
looking forward to the service they were going to get there. And
after they made that transition, they found that the device that
reads his defibrillator every night would not work with, is not compatible with the service that AT&T was providing. And so he had
to go back. And they also maintained their U-Verse service, but
they also subscribe to an analog line to their house to connect just
to that device.
So there is some work that needs to be done in the industry, in
the medical device industry, to make those devices where they will
be compatible with the new technologies, as well. And I think that
is a good example of something I talked about in my testimony, in
terms of needing reasonable rules of the road to make these transitions that consider all of the implications and ramifications of those
changes.
Senator PRYOR. Do you have any comments on IP transition and
data usage?
Mr. KURTZ. Just quickly. Everything has pretty much been said.
Obviously, as Mr. Gardner said, enterprise and government are
driving a lot of that for us. We also offer our own IP product.
And, once again, as you see challenges, every company is kind of
taking a different path with their direction. CenturyLink does not
have a wireless company. So AT&T and Verizon are looking at it
one way. Windstream has a competitive access provider looking at
it another way. We will be looking at it another way.
So we are going through the thoughts right now. You know, it
is being driven pretty fast, but it is going to probably take a 5- to
10-year period to get there for CenturyLink. And we look forward
to working with everybody, but everybody has a little different look
and view of how we are going.
Senator PRYOR. Mr. Ashcraft, I am curious about your company
in terms of, are you trying to do an IP transition there?
Mr. ASHCRAFT. We have a VoIP product that we offer. A few customers are on it. We know that probably people are migrating,
using other products because of our access is decreasing, so we
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know they are utilizing some products. But we do offer that product.
Senator PRYOR. And, Mr. Sanders, you have that sameyou do
IP, right?
Mr. SANDERS. We do. We have invested in a softswitch, and our
remote carrier systems are IP-based. And I think NATCO and a lot
of small companies throughout the country have invested in that
type of equipment.
I guess the thing that I would say is thatI mean, there are a
lot of efficiencies that you can gain by using IP technology. But it
is a situation where we would like to proceed with caution, because
the service that we can provide our customers in our network is dependent on the services that are offered to us from other companies
and the connectivity that we have from other companies.
The country has done a good job in building a network for voice
communications, and we dont want to see anything fall apart, so
to speak, when you transition to IP. And I know that the Committee and the FCC is somewhat familiar with call-termination
issues, which to rural companies like ours are often VoIP-related.
And whether it is intentional or unintentional, those VoIP issues
do affect our customers.
Senator PRYOR. I want to follow up on that in just a minute, but,
first, Mr. Russell, did you want to talk about IP?
Mr. RUSSELL. Well, Senator, I joined the communications industry in 1982, and I remember that at that time the innovations that
were introduced that were remarkable in the marketplace was harvest gold and avocado green as colors of phones you could have in
your home
[Laughter.]
Mr. RUSSELL.as opposed to the basic black. And, of course, the
phones did have dials. So the transformation has been remarkable,
in that my company was a regulated monopoly at that time, as
well.
I think what you hear from us is, like these other companies, we
see this transformation happening toward IP- and cloud-based
services. And the reason that we have been so aggressive with the
implementation of this long-term evolution technology in our wireless network has been to provide the faster download speeds. The
average download is 10 to 12 megabits on this technology, which
is very competitive with cable modem or DSL services. Because we
know that that is wherethe IP- and the cloud-based services are
where so many industries are moving, because it allows people to
be more productive and more cost-effective.
Senator PRYOR. Yes.
Ms. Bowles, did you have anything to add?
Ms. BOWLES. Yes. We are, of course, a company that everything
we do is already IP-based, and so we view this as a huge market
opportunity. And one of the things that our company is doing is we
are looking at starting to offer Voice-over-IP services and some
other IP-based services.
So coming at it from the other side, we view this as a really
promising development from our competitive perspective, the ability to offer phone service and other product lines that we dont currently offer.
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Senator PRYOR. OK. Great.
Mr. Sanders, let me follow upoh, go ahead.
Mr. DRILLING. Could I just
Senator PRYOR. Yes.
Mr. DRILLING.add one more thing, Senator, in response to Mr.
Strodes comments?
You know, I think when we look at this transition and all of the
different products and issues that are out there certainly, you
know, home monitoring, health monitoring, and those kinds of
thingsI think that kind of points to what I know the commissioner is very familiar with; there has been a lot of discussion
about having a trial to kind of work through some of these issues.
And I think that just points out the, you know, urgency and the
need for us to kind of go through this and work through some of
the issues. It is certainly not our intent, by any means, to leave
someone without a heart-monitoring situation. I think the technology can keep up and we can implement that in a way that even
makes this service and those kinds of technology better, more portable.
And I think that those can be worked out, but I just think it
points out the urgency of moving forward with a trial so we can
work through a lot of the questions that we may not have answers
for right now, but we want to work on getting those answers.
Senator PRYOR. Great.
Mr. Sanders, let me follow up with you on something you mentioned a moment ago about call completion. And I assume that Mr.
Ashcraft is having this problem, and I know that Mr. Strode has
had it because we have talked about it before.
But tell the Subcommittee and the group here what you mean
by, you know, the problem with call completion and it being related
to VoIP.
Mr. SANDERS. Well, certain carriersand we dont always know
who they arethey use least-cost routing formulas to try to route
calls in the most inexpensive way that they can. And so, as a result, sometimes in rural areas, where it takes a longer path to get
to the end customer, sometimes those calls dont come through.
And it, like I say, could be intentional or not intentional or a result
of the technology.
But often we dont know about those calls when they happen,
and so it is a little difficult for us to track down what happened.
Because, typically, when the call comes in to us, we dont have any
record of it if it doeswe dont have a record of it if it doesnt make
it in to us. So we have to rely on our upstream long-distance providers to help us with that if we hear from a customer who has reported the problem.
Senator PRYOR. And so, for the customer, what happens is they
place a phone call and it just rings and rings and rings? Or what
does it do?
Mr. SANDERS. Yes. I think that that is what happens on the
other side.
Senator PRYOR. And you just dont everyou really dont know
unless you get a complaint.
Mr. SANDERS. Right. Our switch doesnt ever see the call, we
dont have a chance to deliver it, and our customer doesnt know
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that they were trying to be called unless somewhere down the line
they talked to that person and they say, oh, you know, we had
tried to call you at one time.
Senator PRYOR. And what is the connection to Voice-over-IP?
Mr. SANDERS. Many of the long-distance companies convert the
voice to IP or are using IP, and so they have routers that are set
up that start handing the calls off to try to find the most inexpensive way to route it. And at some point the router either drops the
call or decides not to continue trying to complete the call.
Senator PRYOR. And have you had that problem, Mr. Ashcraft?
Mr. ASHCRAFT. Yes, sir.
Senator PRYOR. And, Mr. Strode, I think you have had that problem, as well.
And I guess the FCC has released a notice of proposed rulemaking on this with Level 3 Communications. I guess there is a
consent decree.
And, Mr. Strode, from your standpoint, are those the right steps?
Does that fix the problem? Tell me how you think this is going.
Mr. STRODE. It is a step in the right direction. I think until we
can identify where all the problems are, it is hard to know what
all the solutions are, certainly. But it is a step in the right direction.
Of course, we would love to see everything move as quickly as
possible, certainly, and our customers would like the problems to
be fixed. It is hard to explain to our customers what is going on,
what causes those issues.
We appreciate your leadership on the resolution that was recently reported out of the full Commerce Committee, and we look
forward to that being passed by the full Senate, as well.
Senator PRYOR. Yes. Thank you. We just passed that.
Ms. Rosenworcel, do you want to have a comment on any of that
you just heard?
Ms. ROSENWORCEL. Well, first things first. If you are calling a
relative in a rural area and your call just never goes through, that
is not acceptable. And if you are trying to reach a business in a
rural area and your call doesnt go through, that is a lost order. It
is also not acceptable if you are trying to reach emergency help in
a rural area and that call never goes through.
So this is a problem I think the FCC has to take action on. We
have set up a taskforce, we have issued a declaratory ruling, and
now we have this rulemaking that Senator Pryor discussed. I think
the good thing about that rulemaking is it proposes new recordkeeping requirements. And those recordkeeping requirements will
help the agency go after the bad actors that do not connect these
phone calls.
And it is my hope I can go back to Washington and convince my
colleagues that we should take action on that soon, because this is
a problem that I think we can resolve and I think it needs resolving.
Ms. Bowles, let me ask you a question based on your testimony.
You talked about licensed and unlicensed spectrum. You mentioned
how important unlicensed spectrum is. Could you tell the Sub-
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committee and everybody else here what you mean by that? I think
a lot of people arent familiar with the term unlicensed spectrum.
Ms. BOWLES. Sure.
Licensed spectrum is spectrum that is allocated for specific uses
and specific people. Unlicensed spectrum is open for anyone to use
who has equipment that will work on it.
One example of that is 900-megahertz spectrum, and you have
running on that spectrum the wireless phones in your house, the
cordless phones, the baby monitors, as well as fixed wireless
broadband. And a number of fixed wireless providers around the
country use 900 predominantly.
You recently had a ruling out of the FCC that Progeny is going
to use that 900 for some first-responder networks that they are
running in some of the major metropolitan areas. And that unlicensed spectrum is also used in toll tags and a number of other
areas.
So what you see in unlicensed spectrum is, because it is wideopen, you have a lot of innovation and you have a lower cost of
equipment and a lower cost for deployment of equipment on that
spectrum because it has a larger market, I guess is a better way
to put it.
And the actual value of that market is somewhere between $17
billion and $37 billion today. And that is not even projecting the
$25 billion savings for cellular offloading onto Wi-Fi networks and
those types of things.
So unlicensed is extremely critical for this countrys infrastructure. And when I mention the importance of it, it is not at the exclusion of licensed spectrum; you need that too. But we have to
bear in mind that auctioning off every piece of spectrum or making
everything licensed is going to shoot us in the foot, because we absolutely need unlicensed spectrum available in this country for the
innovation that we have seen, particularly for rural parts of the
country.
All right. Now, I am going to do the same thing with this panel
I did with the last one. We have covered a lot of ground here. Does
anybody want to offer any comments or thoughts on things we
didnt cover?
Jeff?
Mr. GARDNER. Just one thing that was mentioned earlier. We are
really excited about the E-Rate initiative and what is going on here
in Arkansas and what Commissioner Rosenworcel has done with
her discussion around E-Rate 2.0. I think that is a tremendous opportunity for all the companies here to work with the educators in
Arkansas and across the country to really take full advantage of
the opportunity to connect these students to faster bandwidth to
improve the education system around the country.
So we are excited about it and anxious to do whatever we can.
And I appreciate the leadership of the commissioner and you, Senator Pryor, on this important initiative.
Anybody else have anything?
Well, you guys have been great. Again, we are covering so much
ground here. On any one of these topics, you could drill down and
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spend an hour or more just talking about the one thing. But I
think what we were saying before is that Arkansas really is a microcosm of what is going on out there, some of the challenges, some
of the opportunities, and, you know, the various players in the
market here. It is just a great case study in where we are with
telecommunications.
So what we are going to do here is we are going to take a fewminute break between this panel and our next panel. Why dont
weI guess we can go 15 minutes. Why dont we try to reconvene
right at 11 oclock.
And let me say thank you all for being here and doing this.
And with that, we will just recess until 11 oclock.
[Recess.]
Senator PRYOR. Again, you know, part of the value here is all
these conversations that go on during the breaks, and that is certainly worth doing, but we need to move forward on our next panel.
And lets see, it looks like they are all set up here, so what I will
do is I will just, again, run through the list, and we will just go
around the room.
LaDawn Fuhr, she is with Suddenlink Communications; Doug
Krile, Arkansas Broadcasters Association; Allen Weatherly, AETN;
Len Pitcock, Cox Communications; Mike Wilson, Comcast of Arkansas. I think I got everybody there.
So, Mr. Weatherly, why dont you go ahead and start? And 3
minutes each, and we will just go around the room. Thank you.
STATEMENT OF ALLEN WEATHERLY, EXECUTIVE DIRECTOR,
ARKANSAS EDUCATIONAL TELEVISION NETWORK
Mr. WEATHERLY. Thank you, Mr. Chairman. I want to thank you

for your support of public media and that of your father, Senator
David Pryor, who serves on the Board of the Corporation for Public
Broadcasting. It is very important.
Since 2000, I have been Executive Director of the Arkansas Educational Television Network, a statewide public media service. And
I also serve as Vice Chair of the national PBS Board of Directors.
So, from the point of view of one broadcaster and media content
provider, in our state AETN provides free educational services and
programming from PBS programs like Sesame Street to NOVA,
Ken Burns to, yes, Downton Abbey and AETN favorites like
Exploring Arkansas with Chuck Dovish, Arkansas Week, and
documentaries like our recent Bayou Bartholomew. PBS ratings
are upunusual in todays broadcast environment. So people do respond to mission-based programming.
Our mission is to serve everyone everywhere every day, free to
all Arkansans no matter their station in life or location. All distribution options are important: broadcast, cable, satellite, and online services that are helping AETN reach schools with our
ArkansasIDEAS professional development service in partnership
with the Arkansas Department of Education.
ArkansasIDEAS is a success, now one of, if not the, largest statewide online professional development portals in the nation, with
currently 47,000 registered teachers and growing. Education has
been at the heart of AETN for 5 decades, using connectivity to pro-
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vide targeted educational services to educatorspublic, private,
and homeschool.
Adequate broadband is vital for expanding important services to
education through IDEAS; the AETNPBS LearningMedia, which
delivers thousands of video learning objects for teachers to use in
their classrooms; PD-credit Common Core State Standards resources; and a gateway to the Teacher Excellence and Support professional development that educators are now required to obtain
before being evaluated by their administrators; and contains free
online professional development available through AETN they can
choose to support the teacher.
ArkansasIDEAS has also created an open-access portal for nonlicensed teachers, utilized by the Teach for America program, the
Non-Traditional Licensure Program at ADE, and anyone applying
for an Arkansas teachers license through reciprocity.
With limited resources but using every media platform, AETN
works to provide resources for children to learn and give Arkansans access to unique dramas, documentaries, history, public affairs, and arts programming, accessible to all, which is vital, rural
and urban.
Thank you for this opportunity.
[The prepared statement of Mr. Weatherly follows:]
PREPARED STATEMENT OF ALLEN WEATHERLY, EXECUTIVE DIRECTOR,
ARKANSAS EDUCATIONAL TELEVISION NETWORK
I am Allen Weatherly, Executive Director of the Arkansas Educational Television
Network, a statewide public media service with six transmitters covering our state.
I am completing my thirteenth year as the Director of AETN and have been in educational television for thirty-three years.
On behalf of the AETN and Americas 361 public television stations, we appreciate the opportunity to submit testimony for the record on the importance of local
public television stationsin partnership with PBS and othersin providing needed
educational services to the students, teachers and parents of Arkansas and beyond.
The range of distribution options remains an important part of our servicesfrom
broadcastbecoming even more relevant in an age when so-called cord cutters are
returning to over the air for their local station optionscable, satellite and, importantly, online, which is crucial for state networks like AETN to reach schools all
across the state with our Arkansas IDEAS professional development service delivered free in a partnership with the Arkansas Department of Education. Currently
about 47,000 Arkansas teachers are registered for the service with more than 30,000
using Arkansas IDEAS on a regular basis.
Obviously, broadband capability is very important to us as we continue to find
ways to expand our services to teachers, parents and students through Arkansas
IDEAS, the AETN/PBS Learning Media (delivering thousands of video learning objects for teachers to utilize in their teaching), AETNs mobile learning labs, kids
camps and much more.
AETN also serves our state through broadcast and online capabilities to help
showcase citizens from every part of Arkansas and their work through innovative
projects such as In Their Wordsan extensive archive of interviews with nearly
600 Arkansas World War II veterans-and LOUPE, an interactive portal showcasing
arts and artists in Arkansas.
And I have not mentioned the tremendous and targeted programs and services
AETN and other public stations provided throughout the year, from Downton
Abbey to Sesame Street and NOVA to Ken Burns and our own popular programs like Exploring Arkansas with Chuck Dovish, Arkansas Week and many
others designed to entertain and to educate.
I should mention here that the general audience programming on AETN described
above is for the most part paid by contributions from thousands of Arkansans, not
from the state or Federal grants that support infrastructure, technology and the
educational services, which will be highlighted in more detail below.
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Federal funding of $445 million in two-year advance funding for the Corporation
for Public Broadcasting (CPB) is crucial and while a blip on the radar, if that, in
the Federal budget is very important to rural state networks like AETN and hundreds of other public media stations across the country. As an example, while the
funding AETN receives as a result of Federal grants is an important part of our
funding mix it amounts to something like 13 seconds of annual Federal spending.
Local stations and networks like AETN continue to serve as the treasured educational and cultural institutions envisioned by their founders, reaching Americas
local communities with unique, essential and unsurpassed programming and services.
Local stations treat their audience as citizens rather than mere consumers, providing essential services to all Americans, not just the 1849 year olds to whom advertisers hope to appeal. We serve everyone, everywhere, every day, and for free.
Federal support for CPB and local public television stations has resulted in a nationwide system of locally owned and controlled, trusted, community-driven and
community responsive media entities that form an incredibly successful public-private partnership. At an annual cost of about $1.35 per year for each American, public broadcasting is a smart investment creating important economic activity while
providing an essential educational and cultural service.
I should mention here that Congress eliminating the Public Telecommunications
Facility Program, or PTFP, was a significant blow to all public media stations. Technology infrastructure is extremely important for stations, especially rural stations
like AETN, and the lack of Federal grants and state technology funding is a difficult
hurdle to try to jumpespecially since, as mentioned before, we use member contributions for programming services.
Unlike many other broadcast organizations, PBS and public media are seeing
growth across all of our platforms. PBS has seen a 5 percent increase in primetime
viewership compared to last year, and had six out of the top ten shows for moms
with young kids in June. For 6 months running, PBS.org has been the most highly
trafficked broadcast website.
All sources of funding, Federal funding included, for public broadcasting is important because we are part of the Nations public service infrastructure, just like public libraries, public schools and public highways.
Now, if I may, I would like to describe in a bit more detail how AETN is using
rural connectivity in providing targeted educational services to educatorspublic,
private and home-schooledall across our state. Efforts like what I describe, in various shapes and sizes, are happening across the country at public media stations
when mission trumps demographic audience targeting in order to maximize profit
potential. Nothing wrong with that, of course, but I believe our primary goal is to
serve and we will continue to stretch every resource we have to accomplish our
promise to our citizens.
AETN and ArkansasIDEAS: An Important Tool for Educators and Students.
AETN continues to do some incredible work with quality production related to Arkansas, community outreach, and award-winning and popular programming from
PBS and other sources. All this, in addition to the outstanding educational services
described below, is due to the infrastructure and people throughout AETN.
Specifically for this message, education has always been at the heart of AETN
services for nearly fifty yearsboth formally though education services and informally through all network services directly related to meeting AETNs stated purpose and promise:
PURPOSE (Mission): The purpose of the Arkansas Educational Television Network (AETN) is to enhance and empower the lives of all Arkansans by offering lifelong learning opportunities through high-quality educational television programs
and services.
PROMISE (Core statement): The Arkansas Educational Television Network
(AETN) fulfills its purpose by providing: educational resources to schools and all
educators; innovative and high-quality public media television programs and services that illuminate the culture and heritage of Arkansas and the world; and opportunities to engage and explore new ideas. This relevant AETN content will expand
the minds of children, inform Arkansans about public affairs and current events in
our state, highlight arts and culture, and invite Arkansans to explore the outdoors
and the world around them.
With this in mind, here are some things we would like you to know about the
unique partnership between AETN and the Arkansas Department of Education
(ADE) known as ArkansasIDEAS.
ArkansasIDEAS is now the largest, state-funded online professional development
portal in the Nation. Through the visionary leadership of its parent organizations,
the Arkansas Educational Television Network (AETN) and the Arkansas Depart-
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ment of Education (ADE), ArkansasIDEAS has successfully supported educators for
another Fiscal Year.
Our annual report to the state shows that the number of registered
ArkansasIDEAS users has never been higher (46,697), and our course offerings
(both online and face-to-face) have undergone exponential growth.
As in years past, ArkansasIDEAS has sought new ways to strengthen the types
of professional development resources offered to educators all while maintaining the
superior level of service our users have come to expect from AETN.
With the implementation of the Common Core State Standards (CCSS) in the upcoming school year, our Common Core micro site is one of the most popular services
ArkansasIDEAS administers. Arkansas educators trust the site, which contains a
plethora of Common Core State Standards resources, as the most reliable source of
CCSS updates and information.
Indeed, the site is so popular that people from every state in the Nation have
accessed it.
The site can be searched in a number of ways, though the English Language Arts
and Mathematics. Mathematics-Trainer of Trainers sections are most common.
Much of our education-specific in-studio work over the past fiscal year became video
links that are now housed on the ArkansasIDEAS Common Core micro site.
In addition to the enactment of new standards for teaching and learning, the
teacher evaluation system is undergoing a complete overhaul for the 20132014
school year.
This sweeping reform is the result of the 2011 General Assembly is passage of
the Teacher Excellence and Support System (TESS). TESS, based largely upon
Charlotte Danielsons work, A Framework for Teaching (Danielson, 2007), divides
a teachers work into four domains.
Each domain includes subcategories that further dissect the specific tasks associated with each domain.
A rudimentary checklist will no longer evaluate a teachers work. Rather, the
work of an educator will be thoughtfully analyzed according to the educators performance both in and out of the classroom.
During the last fiscal year, the ArkansasIDEAS staff has spent hundreds of hours
preparing for TESS and is currently supporting TESS through a variety of means.
First, ArkansasIDEAS at AETN constructed a TESS support site. Teachers use
this site as a gateway to the TESS professional development training they are required to obtain before being evaluated by their administrators in the upcoming
school year. The mandated tutorials can also be accessed directly via the
ArkansasIDEAS portal.
Second, the TESS site is enhanced with a reporting feature that enables Arkansas
administrators to get a snapshot of the amount of time their teachers have spent
training for TESS. This component is crucial for administrators who are required
to verify that the educators assigned to their building have completed TESS training.
Managing these snapshot reports requires an enormous amount of effort from the
IT department at ArkansasIDEAS and AETN and will continue to dominate a large
portion of our time in the future.
Even before the TESS website went live, ArkansasIDEAS was proactive in their
approach to TESS.
Our experienced team of licensed educators assigned a domain and sub domain
to every course on the ArkansasIDEAS portal.
The current ArkansasIDEAS course catalog includes these Arkansas Department
of Education-approved domain assignments. In addition, the TESS site also includes
a search-by-domain feature. Now, when an administrator evaluates a teacher and
documents a deficiency in a particular domain, they will have a collection of free,
online professional development offerings from which to choose that will help support that teacher.
This prescriptive-based professional development is perhaps the most significant
change in the new teacher evaluation system.
ArkansasIDEAS is also reaching out to pre-licensed educators across the state.
Working with the ADE Office of Professional Licensure, ArkansasIDEAS and
AETN has created an open-access portal for non-licensed teachers.
This non-licensed portal was created on June 26, 2012 and is utilized by the
Teach for America program, several masters of teaching degree programs, the NonTraditional Licensure program at ADE, and anyone applying for an Arkansas teachers license through reciprocity. It provides the necessary professional development
requirements of Act 969 of the 2013 General Assembly.
An example of a course offered on the pre-licensed portal is the child maltreatment course. This course fulfills the requirements of Act 1236 of 2011, an act that
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mandates all educators to have training in child maltreatment awareness. The
course is also offered on the licensed-side of the portal and hundreds of Arkansas
educators have taken it to-date.
During the last quarter of the past Fiscal Year, ArkansasIDEAS and AETN lent
its talent and resources to the Science, Technology, Engineering and Mathematics
(STEM) Foundations Institute.
This institute took place on June 6, 2013 and was a culminating event for the
ArkansasIDEAS production team, working with the professional staff and infrastructure provided by AETN. Prior to the daylong event, producers captured exemplary STEM lessons in several schools across the state of Arkansas.
Experts in the field of STEM education highlighted each of these lessons on the
day of the institute. Breakout sessions were recorded on the day of the training as
well. The ArkansasIDEAS team of educators, producers and IT analysts are using
this footage to create seven courses, one for each of the seven STEM frameworks,
housed on the ArkansasIDEAS portal maintained through AETN.
ArkansasIDEAS continues to look for ways to serve Arkansas educators.
We now offer a dedicated library of Disciplinary Literacy courses. This library is
especially helpful for educators wishing to add an area of licensure to their teaching
certificate.
The Disciplinary Literacy Library contains forty-five hours of ADE-prescribed,
professional development courses all of which are offered on the ArkansasIDEAS
portal. Upon completion, teachers can submit this credit, along with appropriate
Praxis scores, to the Office of Professional Licensure at the Arkansas Department
of Education for approval and add an area of certification to their teaching license.
Expanding the number of high-quality professional development courses and resources offered on the portal continues to be a top priority at ArkansasIDEAS.
In the past fiscal year alone, 253.5 hours were added to the ArkansasIDEAS portal, and many of these courses were produced and created by the ArkansasIDEAS
team at AETN.
In addition to the work done in-house, ArkansasIDEAS maintains a constant
presence at educational conferences around the state.
AETN and ArkansasIDEAS education professionals often present at these conferences while our production teams continue to be in demand filming keynote addresses and breakout sessionslater used to create ArkansasIDEAS courses or resources.
ArkansasIDEAS provides technology training to schools that need it and have
even acquired as a service that we now offer to educators who request it.
ArkansasIDEAS acquired two mobile labs that we have loaned to educational conferences and schools. Both the iPad and MacBook labs are equipped with standalone, Wi-Fi capability. It is our hope that these transformational tools will be utilized in professional development trainings and checked out to school districts who
want to provide their teachers with technology training but lack the resources available to do so.
ArkansasIDEAS, a partnership of the Arkansas Educational Television Network
(AETN) and the Arkansas Department of Education (ADE) has been a leader in providing educational resources during the past year and will continue to stay ahead
of the upcoming educational changes as we seek out new ways to support Arkansas
educators.
AETN is also expanding services that are important to Arkansans both rural and
urban by developing an agricultural project and a public safety statewide first responder system utilizing our transmitters located throughout the state, just to cite
two examples.
Across every platform, public media stations are working with PBS and others
partners providing new resources for children to learn, and giving all Americans access to the dramas, documentaries, history, news and public affairs, and arts programming that expands their horizons and opens up new vistas free and accessible
to all.
This is what sets us apart, and thats why I am honored to be a part of a public
media system that continues to serve all citizens with educationaland, yes, even
entertaining programs and services. Connectivity is a crucial player in all this, especially for a rural state like Arkansas.
Thank you for the opportunity to speak with you. It has been a pleasure.
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74
Mr. Pitcock?
STATEMENT OF LEN PITCOCK, DIRECTOR OF GOVERNMENT
AFFAIRS, COX COMMUNICATIONS
Mr. PITCOCK. Thank you, Mr. Chairman. Again, I am Len

Pitcock. I am Director of Government Affairs for Cox Communications here in Arkansas.
Cox Communications is the states largest traditional cable provider, offering a variety of products to our residential and business
customers. Our footprint consists of a service area primarily covering the northwest corner of the state. Today we offer video services, broadband, and telephone to our Arkansas customers, and in
the near future we will likely offer home security services, as well.
Cox and almost all of the other providers here today offer a
prime example of the convergence in technology found in the marketplace. As the Telecommunications Act of 1996 closes in on almost its 18th year as the primary regulatory framework for our industry, we see consumers gaining the full benefit of this legislation.
It wasnt that long ago when Cox customers were offered only a
handful of channels in an analog-only format and 56K modems.
Today, we and others are using our advanced fiber-rich networks
to deliver any number of competitive products, giving consumers a
wide array of choices for video, Internet, and telephone.
And I should mention it has just been 7 years since we launched
our telephone product here in Arkansas. Today, we are the fourthlargest telephone company in the state and likely the largest competitive local exchange carrier. These advancements are made possible wholly from the investment of private capital into our business.
Today, Cox Communications offers almost 500 analog, digital,
and high-definition channels here in Arkansas, speeds of 150 meg
downstream to every customer that we serve, and telephone service
in almost every community that we serve.
We heard Mr. Merrifield from the AREON network on the first
panel today talk about the size of the network and their capacity,
and I am proud to announce that our network produces the same
speeds. Our business customers have access to up to 10 gigs down
today. In fact, part of the AREON network rides on our plan.
Let me be quick to say that government-subsidized competition
has always been a concern for the entire telecommunications industry. As Federal and state lawmakers continue to address last-mile
broadband in America, we would again urge them and you to carefully consider the investments made by companies like Cox in the
marketplace today before allowing government dollars to compete
directly with those that have taken a financial risk.
In 2010, Arkansas was found to be the most competitive state in
the country for broadband services. While we recognize government-funded efforts to address last-mile broadband are needed and
appropriate in areas where no service is available, government
should focus its efforts in Arkansas and around the country on increasing broadband adoption through existing broadband providers
rather than using taxpayer dollars to fund network construction
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and overbuilds in areas where broadband service is already available.
Thank you, Mr. Chairman.
[The prepared statement of Mr. Pitcock follows:]
PREPARED STATEMENT
OF
LEN PITCOCK, DIRECTOR

COX COMMUNICATIONS
OF
GOVERNMENT AFFAIRS,
Good morning, Mr. Chairman. Again, Im Len Pitcock, Director of Government Affairs for Cox Communications here in Arkansas.
Cox Communications is the states largest traditional cable provider offering a variety of products to our residential and business customers. Our footprint consists
of a service area primarily covering the northwest corner of the state. Today we
offer video services, broadband and telephone to our Arkansas customers and in the
near future, will likely offer home security services as well.
Cox, and almost all of the other providers here today, offer a prime example of
the convergence in technology found in the market. As the Telecommunications Act
of 1996 closes in on almost its 18th year as the primary regulatory framework for
our industry, we now see consumers gaining the full benefit of the Act.
It wasnt that long ago when Cox customers were offered a handful of channels
in an analog-only format and 56k modems. Today, we and others are using our advanced fiber-rich networks to deliver any number of competitive products giving consumers a wide array of choices for video, Internet and telephone. I should mention
its been just 7 years since we began offering telephony in Arkansas. Today, we are
the 4th largest telephone provider in the state and the largest among all competitive
local exchange carriers.
These advancements are made possible wholly from the investment of private capital into our business. Today Cox Communications offers almost 500 analog, digital
and high definition channels in Arkansas, 150 megs downstream broadband speed
to every customer and phone service in almost every community we serve.
Government subsidized competition has always been a concern for the entire communications industry. As Federal and state lawmakers continue efforts to address
last-mile broadband in America, we would again urge them (and you) to carefully
consider the investments made by companies like Cox in the marketplace today before allowing government dollars to compete directly with those of us that have
taken the financial risk.
In 2010, Arkansas was found to be the most competitive state in the country for
broadband services. While we recognize government-funded efforts to address last
mile broadband areas are needed and appropriate in areas where no service is available, government should focus its efforts in Arkansas and around the country on increasing broadband adoption through existing broadband providers rather than use
taxpayer dollars to fund network construction and overbuilds in areas where
broadband service is already available.
Thank you, Mr. Chairman.

Mr. Wilson?
STATEMENT OF MIKE WILSON, SENIOR DIRECTOR OF
GOVERNMENT AFFAIRS, COMCAST OF ARKANSAS
Mr. WILSON. Thank you, Mr. Chairman.

Good morning. My name is Mike Wilson, and I am the Senior Director of Government Affairs for Comcast of Arkansas, based here
in Little Rock.
Comcast provides video, broadband, phone, and home security
services in central Arkansas and in the West Memphis area. Since
1996, Comcast has invested over $206 million in system upgrades
to make sure that our Arkansas customers have access to the same
programming and technology choices available anywhere in the
country.
Our core video offering, Xfinity TV, now leverages IP technology
and cloud-based servers to deliver an enormous library of video
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content when, where, and on whatever devices our customers
choose. Our new entertainment platform, which we call X1, integrates social media, search, and third-party applications to redefine
the viewing experience.
But even with all of these choices and capabilities that the cable
industry offers, when it comes to broadband, there are still too
many Americans who are on the wrong side of the digital divide.
There are programs here in Arkansas that the cable industry has
implemented to address the barriers to broadband adoption. Cable
companies like Cox and Suddenlink and Conway Corporation, in
addition to others, partner with Connect2Compete, which provides
low-cost Internet access to families who have children participating
in the free school lunch program.
Comcasts program is called Internet Essentials and is the nations largest and most comprehensive broadband-adoption program. It provides low-cost broadband service for $9.95 a month, the
option to purchase a Comcast-subsidized Internet-ready computer
for under $150, and multiple options to access free digital literacy
training in print, online, and in person. Families must have one
child eligible to participate in the free or reduced lunch programs,
and it includes public, parochial, private, and homeschool students.
Since Comcast introduced Internet Essentials just 22 months
ago, we have connected more than 220,000 families, or nearly
900,000 low-income Americans, to the power of Internet in their
homes, many for the very first time. In Arkansas alone, Comcast
has connected over 750 low-income families. That is over 3,000 Arkansans who now benefit from access to the Internet.
Comcast did not accomplish our 2-year results alone. We have
partnered with all of our school districts, many nonprofit organizations like the Arkansas state PTA, the Boys and Girls Club, Big
Brothers/Big Sisters, and many faith-based organizations to help
get the word out and assist with our training. All of these organizations have played a significant role in the programs success.
Senator Pryor, thank you for this opportunity to testify today
and share information about what the cable industry is doing to expand broadband adoption in Arkansas.
[The prepared statement of Mr. Wilson follows:]
PREPARED STATEMENT OF MIKE WILSON, SENIOR DIRECTOR
AFFAIRS, COMCAST OF ARKANSAS
OF
GOVERNMENT
Good morning, my name is Mike Wilson and Im the Senior Director of Government Affairs for Comcast of Arkansas based here in Little Rock.
Comcast provides video, broadband, phone and home security services in central
Arkansas and in the West Memphis area.
Since 1996, Comcast has invested over 206 million dollars in system upgrades to
make sure our Arkansas customers have access the same programming and technology choices available anywhere in the country.
For example, Comcast provides our customers the ability to manage and personalize TV viewing, offering over 100,000 of the best and most recent TV shows and
movies on their television sets, their computer and mobile devices in addition to
thousands of choices to instantly stream at the customers fingertips in and out of
the home.
But even with all of these choices and capabilities that the cable industry offers,
there are still way too many Americans who are on the wrong side of the digital
divide. Access to the Internet for our children is a must and there are many low
income families who do have access to the Internet but make a conscious decision
not to subscribe.
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In understanding the barriers to Broadband adoption, the FCC has identified
three major factors:
47 percent of low income families dont subscribe because they lack digital literacy or dont feel that its relevant to their lives; 24 percent state that price
of Broadband service is a deterrent and 15 percent dont subscribe because of
the cost of the computer.
There are a number of programs here in Arkansas that the cable industry has
implemented to address all three of these barriers to adoption.
Cable Companies like Cox, Suddenlink and Conway Corp., in addition to others,
partner in Connect 2 Compete, which provides low cost Internet access to families
who have children participating in the Free School Lunch program.
Comcasts program is called Internet Essentials. Internet Essentials costs just
$9.95 a month for service, provides access to FREE digital literacy training and the
option to purchase a computer for under $150. Internet Essentials is the largest and
most comprehensive broadband adoption program of its kind and Im proud to say
that last week we began our third year of providing this service in all of the 39
states where Comcast currently provides Broadband.
Im very pleased to tell you that since the onset of this program, more than
220,000 families now have a Broadband connection in their homes as a result of
Internet Essentials. This means an estimated 900,000 low income Americans nationwide now have access to Broadband.
Across the Nation, Comcast has over 30,000 partner Schools; 20,000 individuals
trained; 18,000 computers sold; 7,000 community partners and 27 million brochures
distributed.
Bringing it closer to home . . . In Arkansas, Comcast has connected over 750 low
income families, thats over 3,000 Arkansans who now benefit from access to
Broadband that didnt prior to Internet Essentials being introduced. And these numbers dont take into account the success that others are seeing with similar programs.
Recently, Comcast announced additional enhancements which include:
Increasing the speed to 5 Mbps downstream and 1 Mbps upstream;
Streamlining the enrollment process by expanding the instant approval process
for families whose students attend schools where 70 percent or more of the students are eligible to participate in the National School Lunch Program.
Expanding the eligibility criteria to include parochial, private cyberschool and
homeschooled students
Creating an online application tool that can be used by families on computers
at community centers, libraries or at a friends house to request an application
Introducing the Internet Essentials Opportunities card which can be purchased
by community partners and used toward the cost of subsidizing Internet service
for their families.
Comcast did not accomplish our two year results alone. We have partnered with
all of our school districts; non-profits organizations like the Boys and Girls clubs;
Big Brothers/Big Sisters and many faith based organizations to help get the word
out and assist with our training. All of these organizations have played a huge role
the programs success.
As all of these different adoption programs progress, Im sure well see the similar
outcomes from all of the other companies. This will definitely benefit the low income
families in our state.
Thank you for this opportunity to testify and share information about what the
telecommunications industry is doing to expand the adoption rate to Broadband in
Arkansas.

Mr. Krile?
STATEMENT OF DOUG KRILE, EXECUTIVE DIRECTOR,
ARKANSAS BROADCASTERS ASSOCIATION
Mr. KRILE. Good morning. My name is Doug Krile. I am Executive Director of the Arkansas Broadcasters Association. ABA is a
not-for-profit trade association representing approximately 190
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radio stations and 15 television stations in Arkansas, and that is
pretty much everybody.
Thank you for the opportunity to appear before you and briefly
discuss some of the key issues impacting broadcasters in Arkansas.
Many of our member stations, particularly the radio stations, are
locally owned and operated in the rural parts of Arkansas. As such,
they play a vital role in providing emergency information and contributing to the day-to-day lives of listeners and viewers who live
in those areas.
When a sudden flood killed 20 campers at a remote campground
in southwest Arkansas in 2010, radio and TV stations were the
only sources of information as the heavy rain developed. The campground was outside the range of a nearby NOAA weather station.
The broadcast stations also became the source of information on
victims and survivors.
After Hurricane Katrina, the Arkansas Parks and Tourism agency developed a system to help evacuees from nearby Louisiana and
Mississippi get updated information about the availability of food
and shelter in Arkansas. Key to that systems success was the utilization of radio and TV stations to tell evacuees about the system.
Because many of our member radio stations are essentially family-owned and operated on very slim profit margins, ABA feels compelled to argue against congressional efforts to impose a new licensing fee for musical performers. We believe strongly that radio
stations provision of free airtime to play performers music is, in
itself, fair compensation. Any additional fees could literally force
some stations off the air.
Other key issues focus more on the television side of our industry. Changes to the retransmission consent system proposed by the
pay-TV industry would harm stations here. Currently, financial
terms of cable, satellite, and telecommunication coverage carriage
of local-market TV stations are negotiated in a free and open marketplace. Many times, our small-market TV station members must
negotiate against very large pay-TV providers.
Despite this, broadcasters support the market-based system Congress created, which results in both sides reaching an agreement,
keeping broadcast stations on pay-TV systems without interruption
in almost all cases. And, of course, broadcast signals are always
available to consumers free over the air via an antenna.
The other issue of concern to TV broadcasters involves the FCCs
upcoming auction of broadcast spectrum. While the ABA does not
oppose a truly voluntary spectrum auction, we agree with the National Association of Broadcasters that the process must ensure
that broadcasters who do not participate in the auction retain their
current coverage areas so they can continue to serve their local
communities.
We also believe the FCC should work to limit the number of stations that must move to new channels during the repacking process. Currently, over 700,000 television viewers in Arkansas receive
all of their TV programming over the air. Forced channel changes
will disrupt those viewing habits, harming consumers and broadcasters.
Thank you.
[The prepared statement of Mr. Krile follows:]
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PREPARED STATEMENT OF DOUG KRILE, EXECUTIVE DIRECTOR,
ARKANSAS BROADCASTERS ASSOCIATION
Good morning. My name is Doug Krile. I am Executive Director of the Arkansas
Broadcasters Association. ABA is a not-for-profit trade association representing approximately 190 radio stations and 15 television stations in Arkansas.
Thank you for the opportunity to appear before you and briefly discuss some of
the key issues impacting broadcasters in Arkansas. Many of our member stations
(particularly the radio stations) are locally owned and operate in the rural parts of
Arkansas. As such, they play a vital role in providing emergency information AND
contributing to the day-to-day lives of listeners and viewers who live in those areas
When a sudden flood killed 20 campers at a remote campground in Southwest Arkansas in 2010, radio and TV stations were the only sources of information as the
heavy rain developed. The campground was outside of the range of a nearby NOAA
weather station. The broadcast stations also became the source of information on
victimsand survivors.
After Hurricane Katrina, the Arkansas Parks and Tourism agency developed a
system to help evacuees from nearby Louisiana and Mississippi get updated information about the availability of food and shelter in Arkansas. Key to the systems
success was the utilization of radio and TV stations to tell evacuees about the system.
Because many of our radio station members are essentially family-owned and operate on very slim profit margins, ABA feels compelled to argue against Congressional efforts to impose a new licensing fee for musical performers. We believe
strongly that radio stations provision of free air time to play performers music is
fair compensation, and any additional fees could, literally, force some stations off
the air.
Other key issues focus more on the television side of our industry. Changes to the
Retransmission Consent system proposed by the pay TV industry would harm stations here. Currently, financial terms of cable, satellite and telecommunication company carriage of local television stations are negotiated in a free and open marketplace. Many times, our small-market TV station members must negotiate against
very large pay TV providers. Despite this, broadcasters support the market-based
system Congress created, which results in both sides reaching an agreement keeping broadcast stations on pay TV systems without interruption in almost all cases.
And of course, broadcast signals are always available to consumers free, over-theair via an antenna.
The pay TV industry is pushing for changes in the law that would tilt the retransmission consent negotiation process in its favor. Ultimately, altering the process to
favor pay TV providers will mean less choice for consumers and fewer dollars for
local stations to use for news and public affairs programming, not to mention emergency weather coverage.
The other issue of concern to television broadcasters involves the FCCs upcoming
auction of broadcast spectrum. While the ABA does not oppose a truly voluntary
spectrum auction, we agree with the National Association of Broadcasters that the
process must ensure that broadcasters who do not participate in the auction retain
their current coverage areas so they can continue to serve their local communities.
We also believe the FCC should work to limit the number of stations that must
move to new channels during the repacking. Currently, over 700,000 television viewers here in Arkansas receive ALL of their TV programming over-the-air. Forced
channel changes will disrupt those viewing habits, harming consumers and broadcasters. Television stations (and the ABA) are STILL fielding phone calls from consumers who are confused by the digital conversion that happened several years ago!
To ensure that TV viewers interests are protected, we ask Congress to carefully
oversee the FCCs implementation of the incentive auction legislation.

Ms. Fuhr?
STATEMENT OF LADAWN FUHR, MIDSOUTH REGIONAL
MANAGER OF COMMUNITY AND GOVERNMENT RELATIONS,
SUDDENLINK
Ms. FUHR. Good morning, and thank you for the opportunity to
speak.
I am LaDawn Fuhr, an Arkansas native and the Mid-South Regional Manager of Community and Government Relations for
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Suddenlink. Our team oversees Suddenlinks operations here in Arkansas plus three other Delta states.
Suddenlink is the second-largest cable broadband company in Arkansas, and we serve towns like Jonesboro, Russellville, Walnut
Ridge, Batesville, Mountain Home, Hot Springs Village, El Dorado,
and a vibrant mix of other larger, smaller, and rural communities.
We also enjoy a productive working relationship with these communities, and we provide the most advanced TV, Internet, phone service, and in some places home security available in those areas to
approximately 110,000 residential subscribers and 70,000 business
subscribers.
We work hard every day to provide our customers with a superior level of care. And in addition to this customer care, we also
work to make a real difference in the lives of our employees and
the communities where we live and we work.
For example, since 2008, we have helped to e-cycle more than
200 tons of electronic waste, keeping it out of Arkansas landfills.
We support education in Arkansas at all levels through a multitude
of commitments. We provide our video and Internet services to
school districts across the state. We are also a participant in the
national Connect2Compete initiative. Through that effort, we offer
steeply discounted broadband service for qualifying low-income
families with at least one child enrolled in the National School
Lunch Program, helping to bridge the digital divide.
We invest in our people, providing good jobs and benefits to more
than 300 residents of Arkansas. And we are constantly improving
our services, with over $170 million in capital invested in Arkansas
since 2006, and that includes $20 million that is planned for 2013.
Those investments have delivered a better TV experience with
more high-definition channels, an expanded video-on-demand library, and technologies that provide our customers more ways to
enjoy their favorite news, sports, dramas, and comedies both inside
and outside the home. These investments have also delivered a better Internet experience, with download speeds of 50 and 107 megabits per second widely available in our Arkansas service areas.
These speeds are comparable to other large markets.
Our investments in Arkansas have also extended our services to
new areas. And, most importantly, in 2012 we invested $4 million
to construct a 162-mile fiber ring that connects our communities to
one another, our national backbone, and the larger Internet. This
addition enhances the reliability and the robustness of the
broadband services. And we are able to bring to many Arkansas
communities this service, both large and small communities.
In conclusion, Suddenlink is poised for the future. We are a committed and conscientious member of the communities where we live
and serve, and we are very proud to be an industry leader in this
great state.
Thank you for your time.
[The prepared statement of Ms. Fuhr follows:]
PREPARED STATEMENT OF LADAWN FUHR, MIDSOUTH REGIONAL MANAGER
COMMUNITY AND GOVERNMENT RELATIONS, SUDDENLINK
OF
Good morning and thank you for inviting us to participate in this panel. Im
LaDawn Fuhr, an Arkansas native, and the MidSouth Regional Manager of Commu-
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81
nity and Government Relations for Suddenlink. Our team oversees Suddenlinks operations here in Arkansas, plus three other Delta states.
Suddenlink is the second largest cable broadband company in Arkansas. The communities we serve hereplaces like Jonesboro, Russellville, Walnut Ridge, Batesville, Mountain Home, and El Doradoare a mix of vibrant, larger, smaller, and
rural communities.
We enjoy productive working relationships with our Arkansas communities and
provide the most advanced TV, Internet, and phone services available in those areas
to approximately 110,000 residential and 70,000 business customers.
We work hard every day to provide our customers with a superior level of care.
According to the recent J.D. Power survey, Suddenlink was recognized as the TV
services company with the most improved customer satisfaction ratings since 2007.
In addition to customer care, we work to make a real difference in the lives of
our employees and the communities where we live and work. For example,
Since 2008, weve helped eCycle more than 200 tons of electronic waste, keeping it out of Arkansas landfills.
We support education in Arkansas, at all levels, through a multitude of commitments. We provide our video and Internet services to school districts across the
state. We are also a participant in the national Connect to Compete initiative.
Through that effort, we offer steeply discounted broadband service for qualifying, low-income families with at least one child enrolled in the National
School Lunch Program.
We invest in our people, providing good jobs and benefits to more than 300 residents of this state.
We are constantly improving our services, with over $170 million in capital invested in Arkansas since 2006, including $20 million planned for 2013.
Those investments have delivered a better TV experience, with more high-definition channels, an expanded video-on-demand library, and technologies that
provide our customers more ways to enjoy their favorite news, sports, dramas,
and comedies, both inside and outside the home.
These investments have also delivered a better Internet experience, with
download speeds of 50 and 107 megabits per second widely available in our Arkansas service areas. These speeds are comparable toand in some case better
thanthe speeds available to citizens of major urban areas.
Our investments in Arkansas have also extended our services to new areas. Importantly, in early 2012, we invested $4 million to construct a 162-mile fiber
ring that connects our communities to each other, our national backbone, and
the larger Internet. This addition enhances the reliability and robustness of the
broadband services we are able to bring to many Arkansas communities, both
large and small.
In conclusion, Suddenlink is a committed and conscientious member of the communities we serve, and were very proud to be an industry leader in this great state.
Thank you for your time.

Let me also note that all of our panelists have done a great job
today of keeping their comments to the 3 minutes. It is pretty common in Washington for them to run on and on and on. And so
thank you all. You guys have shown great discipline, but also you
justtypical Arkansas, you just want to get down to the meat and
potatoes and dont have to hear yourself talk. So, anyway, thank
you for that. We appreciate it.
Let me start with Mr. Krile.
I know that you have television and radio members.
Mr. KRILE. Yes, sir.
Senator PRYOR. And I assume that the number of your owners
have gone down over the years, and so there has been some consolidation and whatnot.
But I am curious about how the Internet has changed the broadcast business model. Tell us how it is changing the broadcast business model.
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Mr. KRILE. Well, the broadcasters have had to adopt the Internet
and find the best ways to utilize it. Putting their radio station signals on the Internet is very common, even in the smaller-market
stations. Using a Website to provide news and information to their
listeners and viewers has become crucial. It is really a matter of
pairing the two together and providing the services to as many people as you can.
I think radio stations that havent adopted to that and started
to use the Internet are few and far between. I cant actually tell
you of any off the top of my head that dont have some type of
Internet presence. And many of them really rely on it, for sporting
events in particular, where there are people out of the market or
even out of the state who want to hear the play-by-play broadcast
the local stations are doing.
Senator PRYOR. Yes. Well, I can speak firsthand to that because
I use that sometimes.
Let me ask about AETN. I know you are a little different model
than what most of Mr. Kriles members are, but how has the Internet changed the model, the business model, so to speak, for AETN?
Mr. WEATHERLY. Well, certainly, the education part, which we
have always doneit is in our namebut the ability to do online
services, digital services, allowed us to really expand our educational services and jump full force into professional development.
Without the Internet capability, that would have been extremely
difficult for us to grow the way that we did. That happened in
2005, and now we have 47,000 teachers who are usingArkansas
teachers who are using it. In fact, teachers from every state are
using the system. So if they were to try to find AETN broadcast,
it wouldnt work.
It is still extremely important to us, the broadcast part of it, as
are our other partners here, but Internet-based activities has really
been the growth area for AETN.
Senator PRYOR. And lets talk about rural areas. Are you having
trouble getting that out into rural Arkansas?
Mr. WEATHERLY. I wouldnt say particularly. We have had great
response. In fact, the ArkansasIDEAS program really worked initially because of its attractiveness to rural areas.
I think our biggest problem for rural is funding, obviously, to be
able to replace equipment, with the loss of PTFP and some other
programs federally. That has been a big hindrance to us. So when
I look at what we are doing now, I feel pretty confident. What we
can do in 5 years, especially capital-based, for a nonprofit like us
is a difficult enterprise.
Senator PRYOR. And I should know this, and I dont. But does
AETN follow the same model that the commercial broadcaster does
in terms of getting their signal carried on a cable system? Tell us
how that works.
Mr. WEATHERLY. Well, in a rural area, they oftentimes take it off
of our broadcast signal, off the tower. Other than that, we have
some landlines with Conway Corp., with Comcast, and a few others. So, yes, we do have ain rural, they are going to do very much
a similar thing, especially in many rural areas for cable and satellite. They are going to take our signal off-air and translate that
or
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Senator PRYOR. And how does the money work? How does the
money work with public broadcasting and cable?
Mr. WEATHERLY. Not well enough.
[Laughter.]
Senator PRYOR. That is what we always hear, right?
Mr. WEATHERLY. Yes. We dontwe are there. We appreciate
that. That is mandated. We dont receive any income from cable or
satellite. So that model is great for them and we are pleased to be
there, but that is how come you occasionally see me on pledge
drives and other things.
We are a mix of some Federal support; certainly we are a state
agency for the infrastructure and education; and, obviously, viewer
contributions. But in terms of cable, while we are pleased to be
there, and satellite, we dont receive any of that revenue.
Senator PRYOR. And AETN is a statewide network, in a sense.
And can you tell if the viewers, the numbers are going down in
terms of people that are just picking up over the air? Or is that
staying about the same?
Mr. WEATHERLY. Well, Dougs 700,000 is a very prominent figure
for us. I think with cord cutters, I think some of the evidence is
it is probably going up a little bit. But it certainly has not gone
down in recent years. It has leveled out.
But, again, for us, it is a little bit different to talk about because
so much of the cable signal and satellite signal in very rural areas
comes off of our broadcast signal. So it is kind of hard to kind of
parse that out, if that makes any sense.
Senator PRYOR. Yes, that does.
And I know that you have gone through this digital television
transition. Is all that behind you now? And are you still broadcasting on analog at all?
Mr. WEATHERLY. No. No.
Senator PRYOR. And so it is all digital? What is your sense of
people adopting digital?
Mr. WEATHERLY. Oh, I think it is happening pretty rapidly. Because it is like with LP records, you know, they didnt die out because anybody put a rule; it is just that nobody made them anymore.
Senator PRYOR. Right.
Mr. WEATHERLY. And I think that is what has happened with
analog and digital. People have responded and they have adapted
pretty quickly to it.
Senator PRYOR. Mr. Pitcock, let me ask youI am going to
change gears here. I know that right now there is a dispute between CBS and Time Warner about the signal and who carries
what and how much everybody pays. And is that nationwide or is
that just in isolated areas?
Mr. PITCOCK. The disputes?
Senator PRYOR. Yes, the CBS-Time Warner one. Isnt it on the
West Coast? Do you know?
Mr. PITCOCK. Yes, I believe it is just in California, Senator.
Senator PRYOR. And my memory is that we have not had those
kinds of disputes here?
Mr. PITCOCK. No, we have.
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Senator PRYOR. And my understanding is that is because everybody works really hard to try to make it work.
Mr. PITCOCK. So the disputes have taken place in Arkansas, and
on some occasions broadcasters have gone dark as a result of being
able to come to terms with the multiservice provider, whether it is
a satellite company or a cable company. As you are well aware,
there is legislation in Washington that has been proposed right
now to address this to some degree.
I think the cable industrys position and certainly the position of
Cox Communications is we want to do what is in the best interest
of the consumer. And if that means having some sort of cooling-off
period where instead of the cable being removedand I need to reassure everybody that we cannot carry a broadcaster without their
specific consent. It is usually left to the point where it is being told
that a cable provider or a satellite provider is being pulled off of
the network. And the truth of it is that we cant carry them anymore. By law, we cant carry them.
So it would certainly be our position that if we found ourselves
where a contract would expire, that there be some type of coolingoff period that would allow us, as we continue to negotiate, to keep
those in place.
Senator PRYOR. Yes, I think most viewers have no idea how this
really works, all the contractual back-and-forth on that. But it has
been on the books that way for, what, 20-plus years. I am not quite
sure when it all started. The 96 Act, I guess? I am not quite sure.
But, anyway, I know we are not going to solve that today, but
that does come up periodically. And I think Arkansans kind of wonders why that is and what is going on there. And I think that what
you have isyou know, clearly, the cable companies, they have legitimate reasons for taking their position. But also lets give the
broadcasters a chance just to talk about their view of that. I know
we are not going to solve this today, but since I have broached it,
lets go ahead and hear from the broadcasters, as well.
Mr. KRILE. Well, I think the broadcast industry basically believes
that because these negotiations do reach an agreement 99 percent
of the timethey might go right down to the 11th hour, and that
11th hour may get pushed back once or twice or three times. Fort
Smith just recently went right down to the wire
Senator PRYOR. That is right.
Mr. KRILE.but there was an agreement reached. And we just
believe the system as it is structured right now works and should
continue to work.
I think the biggest thing is the public needs to understand that
20 years ago the networks paid the local television stations to carry
the network signal. That is completely upside-down now. And this
is why the retransmission consent negotiations are so much more
prominent than they were even 10 years ago. Because, in the past,
the television stations let the cable companies carry them under
terms of the must-carry laws, but now that they are not getting the
revenue from the network, the retransmission consent negotiations
have become much more prominent even for the small television
stations.
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And that is why we just believe that it is working most of the
time. The Time Warner case right now is really a rarity. You dont
hear about all the ones that succeed.
Senator PRYOR. Mr. Wilson, I dont want these guys to have all
the fun.
[Laughter.]
Senator PRYOR. I want to ask you a question, as well. And that
is something that I know that Comcast and the other cable companies are acutely aware of, and that is the cost of programming. And
I know that it is hard to talk with too much specificity about it because it is just hard to talk about for legal reasons. But my understanding is the cost of programming to you continues to go up. And
there is a bill in Washington that Senator McCain is offering on
a` la carte.
And, again, just because some people here in Arkansas are not
that familiar with that issue, could you give us just the sort of 1minute summary of that and sort of how Comcast views all that?
Mr. WILSON. Well, I think the concerns from the cable industrys
standpoint when it comes to a la carte is that it is very difficult
I mean, a lot of times, the programmers include groups of programs
during the negotiations, and one channel may be required if you
purchase another one. So I think it isand, again, Senator, this is
an issue that is handled on levels much higher than mine.
Senator PRYOR. Sure.
Mr. WILSON. But it is a problem that I think that we are concerned. I think the biggest concern, I think, when you come to a
la carte is that there are some programs, some niche programs,
that if they werent combined may not ever seethe viewers may
never be able to see. So I think that is the biggest concern.
Senator PRYOR. But is it true that your cost of programming continues to go up in terms of what
Mr. WILSON. Without a doubt, yes, sir.
Senator PRYOR.content providers are charging.
And do you have that same experience?
Ms. FUHR. Yes, we do. Costs are constantly going up. And, you
know, you actually hear it reported, you know, what the different
networks say because they are taking on different programming,
different sports programming. I mean, they have actually become
very, you know, forward about talking about what it is costing.
And what we try to do is to package everything as cost-effective
for the consumers. We have tiering. We have different ways that
they can bundle to keep all their costs down.
And like Mr. Wilson said, there are lot of networksI mean, if
you look at how many networks have grown and changed over the
years, there are networks that might not have even survived if
they had been offered a la carte. Because they were in a bundle
and they could offer some niche programming that took off and got
the network some recognition.
And that is the bottom line, is to give our consumers options,
cost-effectiveness, and entertainment. And so by bundling and trying to keep our cost factors down for them is the best way we can
do it. But it is a struggle. I mean, you know, we all see that.
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Senator PRYOR. Because isnt it true that the more you have to
pay for the programming, at some point you are going to have to
pass that on to the customer?
Ms. FUHR. Exactly. And, you know, it is an issue of where do you
want to do that. And we tryanytime we do take a rate increase,
we dont ever pass on the full amount that we are paying to the
customer, but, you know, just a slight increase just to help offset
that. Because we want to keep a variety for them, we want to keep
it fresh, and we want to offer them the most current programming
possible.
So it is a struggle, though.
Senator PRYOR. Yes.
And, Mr. Wilson, I guess several of you mentioned this
Connect2Compete initiative. And tell us more about that. Tell us
what your company is doing.
Mr. WILSON. You know, this is probably one of the most exciting
things that the industry has become involved in, and the entire industry is getting behind it.
And, again, we know that there are areas where broadband is
available but the consumer has made a conscious decision not to.
And I think it was mentioned earlier in some of the testimony that
part of it is digital literacy, part of it is cost. And what we are trying to do with these programs is address all of these.
All of the programs, I think, are basically the same. I can really
speak more to Comcast Internet Essentials. But we are targeting
families that have a child on the free or reduced lunch program
and allow them service for $9.95 a month, access to a computer for
$150. And what we have found is that the partnerships that were
formed in order to get the word out have been extremely beneficial
and have worked extremely well.
And if I could give you one example of a partnership that we
have with the Little Rock School District, they have a program
called Computer for Kids. And what the school district does is
there are a number of computers that are taken out of the schools
every single year. They take all of those computers, take them to
the Metro Vo-Tech school, right down the street here as a matter
of fact, and refurbish them. And they may getthe ratio may be
1:2 or 1:3, but they refurbish these computers.
We work closely with them, and they have a Computer Power
Day, where, again, it is the same families, families that have a
child on the free or reduced lunch program, can come in and purchase a computer for $40.
So we have worked closely with them. It has been extremely successful. It is partnerships like that that I think are really benefiting and allow us to move forward with this program. And we are
seeing the results.
Mr. Krile, let me ask aboutI think that you said in your testimony, you sort of raised the question, or maybe you and I talked
about this separately, I cant remember if it was in your testimony
or not, but the fact that you think more people are taking the overthe-air signal now. Is that right?
Mr. KRILE. Yes.
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Senator PRYOR. And tell me what you attribute that to. Is it the
quality of the picture they can get with digital, or is it the cost of
their alternatives, either cable, satellite? Or what is that?
Mr. KRILE. In some cases, it is a cost factor. People are turning
back to over-the-air television because they think their cable or satellite bill has gotten to be too expensive.
And also because there is a trend, particularly among younger
viewers, that they dont have to watch a show at 7 oclock at night.
They can watch it the next day when it is on demand, or they can
watch it next day via Netflix or Hulu or one of those types of services, which now can be pretty much universally put up on your television screen.
And so, by doing the cord-cutting route, they pay $8.95 a month
for Hulu and $8.95 a month for Netflix, take their free over-theair television. What they are losing is the ESPNs of the world for
live sporting events and things like that. So it is a balancing act.
But, yes, people are doing that.
And part of it is the quality of the digital picture. I am a
Comcast customer, but in moving to a new house, we wanted a TV
in an office area that would have required me having Comcast
come in and rewire. So I bought a 19-inch digital TV and a $24.95
digital indoor antenna. It is a flat little white box about that thick.
The picture is beautiful. I was surprised at how good it was. And
all the local stations come in.
And I am an old fogy, but I can begin to see what somebody a
little bit youngerwe still like to watch that 7 oclock show at 7
oclock at night, but I can see where somebody younger who isnt
tied to the house so much, who is busy with outdoor activities, with
kid activities, they could adapt and adopt to that way of watching
television.
Senator PRYOR. Let me ask you, Mr. KrileI want to ask one of
Commissioner Rosenworcels favorite questions here about spectrum. I am assuming it is too early for you to know how the Arkansas television stations might, in this voluntary spectrum auction,
how much of their spectrum they might be willing to give up, or
are you sensing where this is going in Arkansas?
Mr. KRILE. There is not the spectrum shortage in Arkansas there
is in the major metropolitan areas and some of the border states
in particular. We dont think there will be an incredible demand by
the AT&Ts, the Verizons of the world for Arkansas spectrum.
There may be one or two small television stations that are not profitable that might be willing to voluntarily give up their bandwidth
and be repacked on one other stations signal, but I just dont see
a whole lot of that here.
The biggest thing we are concerned about is just moving the stations around channel-wise again, because we still get calls about
the digital conversion and people are still confused about what happened there and where they find their TV stations, even after all
these years. And so we are going to do that, to a degree, perhaps,
all over again with the repacking.
Senator PRYOR. You know, one of the things we talk about in
Washington on this subcommittee is the fact that the Federal Government owns a lot of spectrum. And people point to the Depart-
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ment of Defense. There are other agencies too, but DOD is probably
the big one.
But, you know, in talking to them, it is interesting, because one
of the things they say is, look, We are just like the general public.
We are using more spectrum. More and more and more of our stuff
is wireless and needs that spectrum. And it could be everything
from, you know, some of the weapons systems to just how they
communicate and just the things that they do. They are more mobile than ever, just like everybody else is. So that technology is out
there.
So trying to get the Federal Governmentnow, there is a plan
now that is being floated, and I dont know if it is in the final form
yet, but there is a plan being floated. So we will see how that
works out.
But that is another factor in all of this equation when we talk
about spectrum. And the goal is to try to make spectrum available
so people can have more access to wireless devices, you know, the
consuming public can.
Now, Commissioner Rosenworcel, I feel like you have sat through
this and you may have some comments or you mayI mean, we
have talked about lots of different things. Some are pending before
the FCC, and some are things that you just talk about a lot at
FCC. So do you have any comments?
Ms. ROSENWORCEL. Well, first of all, we do have these big spectrum auctions coming up, and they are going to have big impact
on the way we dole out the airwaves in this country. So we are
keenly aware of their impact or potential impact on broadcasters,
even in markets where there may not be that much demand for
mobile broadband right now.
So I would say to the Arkansas broadcasters that under the law
we do have an obligation in the repacking process to make sure
that stations maintain their geographic and population coverage.
That is in the law, that is important, and it is certainly something
we are going to do.
With respect to retransmission consent, I think I agree with Senator Pryor, we may not be able to solve that today.
[Laughter.]
Senator PRYOR. Yes, that is fair to say.
Ms. ROSENWORCEL. But I do think it is important to acknowledge
that the vast majority of those negotiations are uneventful and
they work. It is just, we do have these situations where consumers
get caught in the crossfire, and they are the collateral damage in
disputes like this, where they cant turn on the television and see
their local game or the local news or their favorite shows.
So if they go on for an extended period of time, I think at some
point the FCC or Congress will start paying more attention. So it
is in everyones interest to make sure that they are resolved quickly and cleanly and without consumer disruption.
Senator PRYOR. Like, maybe before football season starts?
Ms. ROSENWORCEL. Like, maybe.
[Laughter.]
Senator PRYOR. That is what they were saying on theI think
it was on NPR. They were saying that the other day, that they
thought that was one of the big factors in getting that wrapped up.
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So let me do what I did with the other panels. Let me ask if anyone has any other comments or questions, because we have talked
about a lot of different things here, and I didnt know if anyone
wanted to add anything or comment on anything further.
Mr. WEATHERLY. I might just add that
Senator PRYOR. Yes?
Mr. WEATHERLY.to buttress on Dougs comment about the repacking, you know, our concern is the incredible cost, because we
all went throughin AETNs case, it was $25 million to do six
transmitters. And to have to do that again in a climate where fundraising is extremely difficult for us is hard for us to imagine. And
that is at a time when people are using our product more than
ever. So it is a concern to us, obviously.
Senator PRYOR. You maybe covered this earlier, but give us a feel
for AETNs financial situation. I know you get some Federal Government funds. And, of course, you are a state entity so there is
some money there, I am sure. And then you get a lot from your
viewers and then some foundations, et cetera. So is there a mix you
can tell us about?
Mr. WEATHERLY. We get about 10 percent from Federal sources.
Everything AETN receives from Federal sources amounts to 13 seconds of annual Federal spending. And all of public media getstelevision, radiois about an hour. So it is very important to us.
When you hear all the arguments, it is not necessarily about the
overall money.
That is about 10 percent. About 50 percent, 60 percent if you add
in the ADE work with us on education, it comes from state sources.
And then the rest comes from viewer contributions. The programs
that people watch at night or on weekends, the Downton Abbeys,
the Sesame Streets, the Ken Burns, those are paid for by viewer
contributions here in Arkansas. We have tried to, for our 50 years,
always tried to do it that way.
So that is basically the mix. But we are doing relatively well. We
dont have the resources that some commercial stations do, but we
also dont have some of the limitations they do in what we can
broadcast and the mission-based broadcasting.
So I dont know if that answers your question, but
Senator PRYOR. It does. And is it true that your viewership,
PBSs viewership, is actually going up?
Mr. WEATHERLY.it was up 5 percent last year. Downton
Abbey certainly helps, but that is only one program. So it is up
across the board. We dont get the same kind of ratings material
and feedback here at AETN, but our anecdotal and the evidence we
get is it is also up here, too, certainly our responses and things like
that. Funding, not necessarily, because that is always a struggle,
but certainly the use. And there are a lot of reasons for that.
I think I have used the analogy before that when people would
always say there are stations that can take our place, one example
was The Learning Channel in 1972, but they couldnt make any
money, so now they call themselves TLC and their big program is
Honey Boo Boo. And that is fine for some people, butnot criticizing that, and certainly it has a place. But we have continued to
maintain and somewhat grow because we havent gone in that direction. Of course, we are funded differently, too.
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Senator PRYOR. Right.
Well, listen, this is good. Does anybody else have any questions
or closing comments or anything?
First, let me say thank you again for being here and doing this.
I know you all prepared for this and have spent your whole day
with us here at the Arkansas Electric Coops, and we appreciate
that.
And we again want to thank the co-ops for providing their facilities today. It has been a great public service, and we appreciate
them.
What we are going to do now is we are going to close down the
hearing. And I, again, thank everybody for coming, all the work
that you have done.
And what we do on the Subcommittee is we leave the record
open for 2 weeks. So if any of my colleagues around the country,
if they want to submit questions, or if you all want to supplement
some of your answers, you are welcome to do that. But we will
leave the record open for 2 weeks.
And, again, I want to say thank you for all that you do, and
thank you for making sure that Arkansas doesnt get left behind
when it comes to technology and the innovations that you see and
the investment and all the things that you have to do. We really,
really appreciate you.
And also we want to say a special thanks to Commissioner
Rosenworcel for being here and for coming to Arkansas and just
participating around the state. And we are going to go to Cabot in
a little bit and see what they are doing in the Cabot school system
with some of their technology and how students use it and how it
helps the educational process.
So, again, thank you all for being here.
And, with that, we will adjourn.
[Whereupon, at 11:47 a.m., the hearing was adjourned.]
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Senate Hearing, 113TH Congress - Connecting Urban and Rural America: The State of Communications On The Ground

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CONNECTING URBAN AND RURAL AMERICA: THE

AUGUST 19, 2013

For sale by the Superintendent of Documents, U.S. Government Printing Office

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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY,

ROGER F. WICKER, Mississippi, Ranking

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Hearing held on August 19, 2013 ...........................................................................

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Mike Wilson, Senior Director of Government Affairs, Comcast of Arkansas .....

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CONNECTING URBAN AND RURAL AMERICA:

OPENING STATEMENT OF HON. MARK PRYOR,

Senator PRYOR. I will go ahead and call our meeting to order

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Ms. ROSENWORCEL. Thank you, Senator Pryor. Thank you for

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Senator PRYOR. Thank you, Commissioner Rosenworcel. It is

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SAM WALLS III, PRESIDENT, CONNECT ARKANSAS

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Senator PRYOR. You bet. Thank you.

Mr. MANLEY. Thank you, Senator Pryor, for the opportunity to

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The funded service areas encompass:

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Senator PRYOR. Thank you.

Mr. MERRIFIELD. Senator Pryor and distinguished members of

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